in the court of shri arun bhardwaj special judge [ p.c ...€¦ · sidharth luthra, ld. sr.counsel,...

IN THE COURT OF SHRI ARUN BHARDWAJSPECIAL JUDGE [ P.C. ACT] [CBI]05

ROUSE AVENUE DISTRICT COURT, NEW DELHI

ECIR No.DLZO1/02/2019CT No. 01/2020ED Vs Sh. Sanjay Singal

ORDER ON SECOND APPLICATION FOR REGULAR BAIL OFTHE APPLICANT SH. SANJAY SINGAL:

1. This order shall decide the second bail application by and

on behalf of applicant/A2 Sh.Sanjay Singal for grant of

regular bail under Section 167(2) Cr.P.C r/w Section 439

r/w Section 45, 46(1) and 65 of PML Act, 2002 in ECIR

No.DLZO1/02/2019 dated 25.04.2019 registered by the

Enforcement Directorate under Section 3 & 4 of PML Act,

2002.

2. Reply has been filed by Ld.SPP for Enforcement Directorate

(ED).

3. Arguments have been addressed by Sh. Sidharth Luthra,

Ld. Sr.Counsel, Sh. Vijay Aggarwal and Sh.Mudit Jain, Ld.

Counsels for the applicant/accused. Arguments opposing

the application for bail were addressed by Sh.Nitesh Rana,

Ld.SPP for ED.

4. First application for bail filed by this accused was dismissed

ED Vs Sh. Sanjay Singal 1 of 30

Ba:r & Bench (www.barandb,ench.com)

by this Court vide orders dated 24.12.2019. Now,

chargesheet has been filed on 21.01.2020.

5. Brief facts: Brief facts leading to the arrest of

applicant/accused Sh.Sanjay Singal are stated in the reply

filed by ED, in Para no.2 as under:

a) That the CBI registered a case vide FIR No. RCBD1 /2019 /E /0002 dated 05.04.2019 under Sections 120Br/w 420, 468, 471 & 477A of IPC & Section 13(2) r/w13(1)(d) of PC Act, 1988, against M/s. Bhushan Power& Steel Ltd. (BPSL), Sh. Sanjay Singal CMD BPSL, Smt.Aarti Singal Vice Chairman BPSL, Sh. Ravi PrakashGoyal, Sh. Ram Naresh Yadav, Sh. Hardev ChandVerma, sh. Ravinder Kumar Sharma, Sh. Ritesh Kapoor& unknown public servants and private persons forcriminal conspiracy among themselves and withunknown public servants of banks and others to cheatBanks/ Financial Institutions/ Govt. exchequer.

b) That since the said offences constitute scheduleoffences under PMLA and since the instant case involvedthe laundering of proceeds of crime, the ED initiatedinvestigations vide F.No.ECIR/DLZOI/02/2019 on25.04.2019.

c) Further, investigations have revealed a large scalediversion of bank loan funds by the Petitioner andothers which is much larger and that the diverted fundshave been siphoned off to other entities within andoutside India and have been used for creation ofpersonal assets in the name of Sh. Sanjay Singal and/orentities /individuals controlled by him. That based onthe material on record, the competent authority hadreasons to believe that accused Sanjay Singal hadcommitted the offence of Money laundering and wasguilty of offence as specified under section 3 of PMLA,2002 and liable for punishment under section 4 ofPMLA, 2002. There were sufficient evidences on recordwhich clearly brought out that the offence of moneylaundering had been committed and the present accusedwas actively involved in money laundering. Therefore,



the accused had been arrested on 22.11.2019 underSection 19 of PMLA.

d) It is seen that Sh. Sanjay Singal siphoned off of Rs.4229.54 Crore by way of criminal activity related to ascheduled offence has acquired, used and projected theproceeds of crime as untainted, thereby, committed anoffence of moneylaundering as defined under Section 3of PMLA, 2002.

6. The role assigned to this applicant/accused as mentioned in

the complaint at page no.126 is as under:

Sh. Sanjay Singal was the mastermind behinddiversion of loan funds from BPSL either in cash orthrough bank transfers through shell companiesand/or group companies. These proceeds of crimewere laundered by way of infusion in form ofequity in BPSL, creation of assets in the name ofself or family members or groupcompanies/entities controlled by himself or hisfamily members directly or indirectly. He alongwith his associates had devised a scheme to dressup the books of accounts of M/s Bhushan Power &Steel Limited and also to obtain undue monetarybenefits. It involved dubious conversion of debtfunds into equity and other assets. He hademployed different modus operandi to implementhis nefarious designs. One such method wasrouting of the amounts transferred by BPSL tovarious parties purportedly on account of purchaseof capital goods, whereas no actual movement ofgoods took place. The cash amount so generatedwas laundered through artificial generation ofLong Term Capital gains (LTCG) amounting toRs.695.14 Crore. The amount so artificiallygenerated was invested by his family members andhimself in BPSL which were nothing but the fundsdiverted from the accounts of BPSL. Thus, theamount obtained as loan for specific purposes,legally belonging to the company, was illicitlytransferred to the company itself as infusion offresh equity. Thus, by adopting this circuitousroute, Sh. Sanjay Singal (by himself or through



persons/entities under his control, collectivelyreferred to as Singals) was able to project the illgotten money as genuine equity investment inBPSL. Though, the funds came back to thecompany itself after being illegally diverted fromthe company, the character of these fundsunderwent a transformation from being the assetsavailable in the hands of company as bank balanceto the assets in the books of Singals as equityinvestment in BPSL. To illustrate, if BPSL hadtaken a loan of Rs.100, assuming there were noother funds/assets/liabilities in the company, itwas having assets of Rs.100 in the form of bankbalance and liabilities of Rs.100 as loan payable.Subsequent to the diversion of Rs.100 in the abovemanner and infusion of Rs.100 as equity, BPSL washaving assets of Rs.100 as bank balance, capitalassets of Rs.100 (which were nonexisting),liability of Rs.100 in the form of loan payable andcapital of Rs.100. To explain with the help of oneof the basic principle of accountancy that “Assetsminus Liabilities= Share Capital, initially assetsand liabilities were Rs.100 each and the sharecapital was zero. Subsequent to diversion, BPSLwould have assets of Rs.100 as bank balance,capital assets of Rs.100, liability of Rs.100 in theform of loan payable and capital of Rs.100, thusAssets (200) minus Liabilities (100) were equal toShare Capital (100) completely in accordance withthe accounting principle. However, the catch wasthat the assets of Rs.100 were nonexistent andthus he managed to masquerade the actualposition which was Assets (100) minus Liabilities(100) were equal to Share Capital (100), and wenton to project an equation which was impossible(mathematically) and illogical (accountancy). Onthe other hand, Singals, who had no assets in theirnames, managed to acquire equity investment ofRs.100 in BPSL without any corresponding outgofrom their coffers. This is a classic example ofdressing up the books of accounts by showinginfusion of fresh equity enabling him to obtainfresh loans from the banks as his debit equity ratioimproved drastically albeit in the books ofaccounts only. These funds were placed in the



hands of various suppliers as payment for capitalgoods purchase dand then illegally obtained incash through Sh. Ritesh Kapoor and thentransferred to entry operator (placement) whothen showed purchase of previously purchasedshares by Singals (layering) at artificially jackedup prices resulting in generation of LTCG to thetune of Rs.695.14 Crore in the hands of Singals,and then Rs.699.46 Crore admittedly containingthe same funds were infused/invested as equity inBPSL (integration use and projection asuntainted). Further, he had devised anothermodus operandi whereby funds (out of the bankloan funds) were diverted from BPSL by way oftransfers to other entities (operated by differententry operators) by showing the same as capitaladvances against which no supplies were evermade. These entities were in the nature of shellcompanies as these were not having anyoperational income and were being used only forthe purpose of providing accommodation entriesinter alia to the companies controlled by Sh.Sanjay Singal. Thereafter, through a complex mazeof transactions, these funds were transferred to theSingals and the companies controlled by Sh.Sanjay Singal directly and indirectly. Admittedly, acapital infusion of Rs.3330.09 Crore in BPSLduring the years 201112 to 201617 was made bythe promoter companies controlled by him namelyM/s Jasmine Steel Trading Limited, M/s MarshSteel Trading Limited, M/s Diyajyoti Steel Limitedand M/s Vision Steel Limited which had receivedfunds from the shell companies operated bydifferent entry operators either as an equity or loanand the same money which had been initiallytransferred from BPSL was introduced as equity inBPSL by these four companies. Thus, by adoptingthis ingenious modus operandi, Sh. Sanjay Singalwas also able to dress up the books of accounts byshowing infusion of fresh equity enabling him toobtain fresh loans from the banks as his debtequity ratio improved drastically albeit in thebooks of accounts only. Thus, the proceeds ofcrime generated as a result of the criminal activitycarried out by him in relation to the scheduled



offence(s) were laundered by way of projecting thesame as fresh equityinfusion by the companiescontrolled by him. These funds were placed in thehands of shell companies as capital advances(placement) and then routed multiple timesthrough different shell companies operated byvarious entry operators (layering) to the fourpromoter companies and from these fourcomplanies, the same funds were infused/investedas equity in BPSL (integration use and projectionas untainted), which become equity assets inname of companies controlled by Sh. SanjaySingal. Further, by adopting the same modusoperandi, Sh. Sanjay Singal was able to createassets in the names of companies controlled byhim out of the funds diverted from BPSL out of thefunds obtained as loan from banks for specifiedpurposes. An amount of Rs.136.92 Crore wasdiverted from BPSL by Sh. Snajy Singal by showingthe same as unsecured loan (placement) to M/s.Atma Ram House Investment Private Limited(AHIPL), another company under his control,which utilized (layering) a part of these funds(Rs.74.25 crore) to acquire an immovable propertyat 53, Jor Bagh, New Delhi (integration use andprojection as untainted) which is being enjoyedby him as well as his family members. Anotheramount of Rs.11.20 crore (approx.) was utilized ina similar manner to add value to anotherimmovable property at 5, Tolstoy Marg, NewDelhi. Not only in India, Sh. Sanjay Singal wasalso able to create assets in foregin countries byadopting the said modus operandi. Fundsamounting to Rs.118 Crore approx. were divertedfrom BPSL either directly or through shellcompanies operated by entry operators(placement/layering) interalia to the threecompanies controlled by him namely M/s. AatriIron & Power Private Limited, M/s. Titanic SteelIndustries Private Limited & M/s. Vintage SteelPrivate Limited which in turn transferred thesefunds as equity infusion in a foreign companynamely M/s. Aarti Steel Gulf FZCO (layering)which used these funds towards acquisition(integration use and projection as untainted) of



a residential apartment in one of the most poshlocality of London (UK) for an amount of GBP2,02,04,433 (equivalent to approx. Rs.162.34crore at the then prevailing exchange rate). Sh.Sanjay Singal was the mind & will behind theabove dubious transactions which were carried outby his associates and himself in order to availundue pecuniary advantages whereby he managedto swindle crores of rupees from BPSL, which wereused for creation of personal assets in his ownname and in the names of entities controlled byhim including his family members. He had theauthority to operate all the bank accounts whichwere used for generation and projection ofproceeds of crime. He was in possession, direct orindirect, of the proceeds of crime and continued toenjoy the same. He managed to project the same asuntainted assets and even obtained loan againstthe same from banks/financial institutions. Thus,Sh. Sanjay Singal is guilty of offence of moneylaundering as defined in Section 3 of the PMLA,2002 read with Section 70 ibid as he wasdirectly or indirectly indulging in and wasactually involved in all or any process oractivity connected with the proceeds of crimeincluding its concealment, possession,acquisition or use and projecting or claiming itas untainted property.

7. These are the allegations which the Ld. Sr. Counsel and

other Ld. Counsels have tried to address to secure bail for

the applicant/accused.

8. The bail application mentions 16 points for seeking bail

which are as under:

1. Complaint has been filed by the complainantagainst 25 accused persons, however, only theapplicant/accused has been arrested. 2. Offence u/S 3 and 4 PMLA is an offencepunishable with punishment upto seven years,



which is not a grave offence, hence the applicant isentitled to bail.3. Economic offences are not classified fordetermination of grant of bail and the same isdetermined on the basis of length of punishment,for which reliance is placed upon the judgment inP.Chidambaram Vs Directorate of Enforcement inCriminal Appeal No.1831/2019 decided on04.12.2019.4. The applicant/accused is entitled to statutorybail u/S 167 (2) Cr.P.C, 1973, as incompletecomplaint has been filed in the matter, as is clearfrom the complaint itself, wherein it has beenstated that investigation on various aspects ispending, which is in violation of the law laid downin Tunde Gbaja V Central Bureau of Investigation(Delhi) reported in 2007 (2) JCC 1306.5. Complaint u/S 45 PMLA, 2002 has been filedin the present matter, hence the applicant isentitled to bail in terms of Sanjay Chandra VsCentral Bureau of Investigation, (2012) 1 SCC 40.6. Commencement of the trial is not likely totake place in the near future and continueddetention of the applicant who has beenlanguishing in the prison for several days at thepretrial stage does not appear to be warranted:6.1. Pendency of further investigation is not arelevant factor, as held in P. Chidambaram Vs.Directorate of Enforcement in Criminal AppealNo.1831/2019 decided on 04.12.2019.7. The applicant has not been called by the CBI tojoin investigation in the matter, however, withoutany scheduled offence being established, the EDhas arrested the applicant/accused.8. Because the applicant/accused has alreadybeen granted bail in the year 2017 in multipleIncome tax matter and for the last two and halfyears, there has been no instance of influencingany witness or tampering with the evidence of thecase.9. The ED had already attached an amount ofRs.4,025.23 Crores (alleged amount of proceeds ofcrime), which is much in excess of the allegedamount diverted by the company (Rs.2,758 CR.).10. The ED has itself alleged that the company



had undertaken circular transaction, that is, thecompany had allegedly diverted Rs.2,758 CRS. outof company, but the amount routed back was inexcess of the same, that is, to the tune ofRs.3,330.09 CR.; thus, no amount was taken out ofthe pocket of the company.11. The ED has levelled allegations on the basisof amount outstanding on the date of RC,however, the same is irrelevant, as the saidamount also includes interest accrued over theamount availed by the company:11.1. In any case, the allegation of economicoffence is to be considered in the light of the factthat the banks were always secured with adequatesecurity.11.2. The bonafide intention of the company isclear from the fact that apart from the plant forwhich the loans were availed, the company hadgiven its entire assets to the bank, including itsdebtfree assets.12. The company of the applicant/accused was asuccessful business, however, the companysuffered due to Force Majeure/External Factors,due to which the entire viability of the plant wasalso badly affected: The loans were given by the banks to thecompany after looking at the prospects of thecompany. The decades old business of the companysuffered drastically due to Force Majeure/externalfactors, beyond the control of the company. The loan was disbursed by the banks fordifferent phases of the Odisha Plant of thecompany, which were regularly repaid by thecompany, phasewise and a huge amount has beenpaid by the company to the banks. There was delay in disbursement of the loanby the banks during phaseVI of the Odisha Plant,which lead to liquidity crunch and the companyhad to utilize its earnings for the said PhaseV,which also lead to financial turmoil.13. Because the applicant/accused satisfies thetriple test and thus, deserves to be granted bail inthe matter.14. Applicant/accused has deep roots in the



society.15. Regarding statements recorded under sEction50 PMLA:15.1. Statement recorded u/S 50 PMLA are to betested during trial, and are not credible evidenceto deny bail.15.2. Statement recorded after arrest of accusedu/S 50 PMLA, 2002 is inadmissible in law.16. The applicant /accused deserves to begranted regular bail, even otherwise, in light of hismedical condition, in view of the proviso toSection 45 PMLA, 2002 read with Proviso toSection 437 Cr.P.C., as the applicant/accused issuffering from enlarged prostate, DiabetesMellitus, Hypertension, Ischemic Heart Diseaseand Spine Problem.

9. In support of the arguments that only the

applicant/accused Sh.Sanjay Singal has been arrested and

other 24 accused have not been arrested, reliance is placed

on R.Vasudevan Vs CBI 2010(1) JCC 642 to submit that

unfair approach does not befit the premiere investigating

agency like ED as it shows discrimination towards the

applicant/accused in as much as the other coaccused were

not arrested before filing the complaint and only present

applicant/accused was arrested on 22.11.2019. The

submission is that in a country governed by rule of law, all

persons must be dealt with in the same manner.

10. Further, referring to Section 204(1)(b) Cr.P.C, it is argued

that when the complaint was filed before this Court, this

Court has issued summons and not warrants for the

appearance of other coaccused before this Court. Reference

is also made to the judgment in the case of Sudhir Nathani



Vs CBI, a judgment of the Hon'ble Delhi High Court dated

24.07.2003 reported as 108 (2003) DLT 108 to submit that

once summons were issued against the accused who were

not arrested during investigation, the accused should be

granted bail unless there are circumstances warranting

otherwise. Para no.18 of the judgment is as under:

18. On the premise of aforesaid principles, it cansafely be said that while considering theapplication under Section 437 Cr.P.C court cannotbe oblivious of firstly the fact that InvestigatingOfficer did not deem it necessary to either arrestthe accused during investigation or forward him incustody under Section 170 Cr.P.C while filing thecharge sheet under Section 173 Cr.P.C; secondlythat the court while taking cognizance did not findthe circumstances existing in Section 87 Cr.P.Cwhile procuring the appearance of the accusedthrough warrant of arrest that the accused haseither been absconding or is concealing himselfand issued summons for him. Ordinarily thesecircumstances would be favorably disposed infavor of the accused in granting bail unless themagnitude of the offence and punishmenttherefore is very high and severe and there islikelihood of the accused interfering withwitnesses.

11. The Ld. Sr. Counsel argued that there are allegations

against the coaccused that they were entry operators and

hence, substantive offence was committed by them, but they

were not arrested and the allegations at most against the

accused are of conspiracy, but he has been singled out and

arrested.

12. The Ld. Counsel submitted that unlike IPC, which makes a



distinction between principal offender, conspirator and

abetor of the crime, PMLA makes no such distinction and all

these three kinds of accused are covered in the definition of

offence of Money Laundering u/S 3 of the Act.

13. Ld. Counsel further submitted that according to the

complaint, A13 Sh.R.K.Kedia is an entry operator and at

page 90 of the complaint, it is recorded that he has made

admissions. Similarly, A14 Sh.Shirish Chandrakant Shah

made admissions during recording of his statement as

recorded at page no.91 and similarly A21 Sh.Suresh Gupta,

A15 Sh.Vikash Chowdhary, A16 Sh. Himanshu Verma, A

20 sh.Abhay Chand Bardia, A19 Sh.Anil Kumar Khemka, A

22 Sh.B.D.Aggarwal, A25 Sh.Krishan Khadaria, A18

Sh.Praveen Kumar Jain, A23 Sh. Parveen Kumar Agarwal,

A24 Sh.Jagdish Prasad Purohit, A17 Sh.Parveen Kumar

and Sh.Amit Jain have made admissions in their statements

u/S 50 of PMLA, 2002 about accommodation entries, but

still they were not arrested by ED.

14. Ld. Sr. Counsel submitted that the applicant/accused had

acknowledged the contents of his statement recorded in the

year 2016 before Senior Intelligence Officer, DGCEI, New

Delhi. He had also agreed with the contents of the

statement of Sh.Raj Kumar Kedia agreeing that in lieu of

share proceeds of shares sold through Sh.Raj Kumar Kedia

which resulted into long term capital gains to him and his

family members an equivalent amount of cash has been



paid by him to the buyers through Sh. Raj Kumar Kedia. The

Ld. Sr. Counsel referred to the contents of page 23 of the

complaint where this applicant agreed with the contents of

statement of coaccused Sh.Alkesh Sharma and agreed that

whole amount of equity amounting in all to Rs.3330.09

crores invested by M/s Jasmine Steel Trading Ltd., M/s

Marsh Steel Trading Ltd., M/s Diyajyoti Steel Ltd. and M/s

Vision Steel Ltd. in BPSL was routed to the accounts of

these four companies out of the funds diverted from the

accounts of BPSL in the shape of advances shown to various

parties operated by the different entry operators.

15. Ld. Sr. counsel referred to the statement of

applicant/accused as recorded at page no.23 of the

complaint that M/s BPSL had been allotted two coal mines

near Jharsugada plant in Orissa and the company had

invested huge amount of money in development of these

mines. However, subsequently these allotments were

cancelled. Further, two iron ore mines were also agreed

upon as per MOU by the State Government, however, it was

never recommended by the State Government and due to

this, the company was not able to have captive raw

material. The accused stated that these circumstances led to

financial hardship for the company and in order to maintain

a healthy debt equity ratio, the company resorted to these

circular transactions for introduction of equity.

16. Ld. Sr. counsel submitted that the accused had purchased



guest house at 53, Jor Bagh, New Delhi from his own

sources and he had pledged this property with IFCI Bank

and the loan amount was invested as equity in BPSL.

17. Ld. Counsel submitted that the applicant, therefore, fully

cooperated during investigation by making admissions as

also recorded in the complaint and inspite of cooperating

with the Investigating Agency, he has been arrested whereas

24 other coaccused in similar situation were not arrested

and were summoned by this Court on filing of chargesheet

and released on interim bail without their arrest and on

parity, this accused is also entitled to be enlarged on bail.

18. With regard to second submission that the offence is not a

grave offence as it is punishable with punishment upto

seven years, Ld. Sr. counsel referred to the provision of

Section 437 Cr.P.C where a distinction is made for an

offence punishable with imprisonment for seven years or

more. He submitted that imprisonment for seven years is

the distinguishing factor in the offence. In this regard,

reference was made to Section 41 of Cr.P.C. The arrest of an

accused for the offence punishable with imprisonment

which may extend to seven years can be only subject to

fulfillment of conditions as mentioned in the Section.

Reliance is also placed on Section 360 of Cr.P.C to submit

that order to release on probation of good conduct or after

admonition is also provided for a convict for offence

punishable with imprisonment for a term of seven years or



less.

19. Reliance is placed on Shivani Rajiv Saxena Vs Directorate

of Enforcement & Anr order dated 15.12.2017 in Bail

Application No.2164/17 of the Hon'ble Delhi High Court

where also it was noted that the offence u/S 3 & 4 of PML

Act attracts maximum sentence of seven years and bail was

granted to the petitioner.

20. Reliance is also placed on P.Chidambaram Vs Directorate

of Enforcement in Crl.Appeal No.1831/2019 dated

04.12.2019 where the Hon'ble Supreme Court also took into

consideration for granting bail that the term of sentence is

seven years if the accused was convicted u/S 3 of PML Act.

21. Ld. Sr.Counsel also referred to order dated 04.12.2017

passed by the Ld. Special Judge in ECIR

No.DLZO/15/2014/AD(VM) where the submission of Ld.

SPP for ED was that the AgustaWestland Deal involved scam

to the tune of Rs.32000 crores. The Ld. Sr. Counsel

submitted that inspite of huge amount involved in the scam,

the accused were granted bail after filing of chargesheet.

22. Ld. Sr. counsel submitted that the complaint itself

mentions at page 6 para 7.2 as under:

7.2 Vide letter dated 22.05.2019, CBI was requestedto supply details of investigations conducted so farand all relevant documents/other evidencesrecovered/seized during the course of investigation.



The same have not been supplied so far.Investigations in respect of such documents shall beconducted subsequent to the receipt of the same.

23. The above was referred to show that ED has not completed

the investigation and has filed incomplete chargehseet.

24. Ld. Sr.Counsel submitted that the investigation in this case

is going on since year 2014 in Income tax department and

the accused went abroad and returned back and co

operated with all the investigation.

25. Ld. Sr. Counsel referred to page 7 para 7.4 of the

complaint where there is reference to diversion of Rs.2348

crore from bank accounts of Bhushan Power & Steel Ltd.

These are the allegations of Income tax department which

have been noticed in the ECIR in question which is at page

no.125 of the application for bail.

26. Ld. Sr. Counsel submitted that the liability of the Company

towards the banks was only Rs.41000 crores and rest was in

the nature of interest which accrued from the year 2015.

27. Ld. Counsel referred to page 101 of the complaint where it

is noted that as per Sh.Mahender Kumar Khandelwal,

Resolution Professional, BPSL was having assets valued at

Rs.41633,15,16,208/ out of which the value of fixed assets

at Odisha alone was Rs.38037,41,41,624/ as on

05.09.2019.



28. Ld. Sr.Counsel submitted that from the date the assets of

the company were taken over by Resolution Professional,

the company made a profit of Rs.2000 crores.

29. He submitted that offer of Rs.19500 crore for the assets of

the company is a depressed amount being down payment,

otherwise all the assets of the company are safe and secure

and there is no threat to the banks who had given loan to

the company.

30. Ld. Sr. counsel submitted that the coal mines promised to

the company were cancelled and Ld. Sr. counsel hastened to

add that the applicant is not an accused in Coal Scam case.

He referred to page 168 of the application for bail to show

that State of Odisha had recommended for allotment of two

iron ore mines for a period of 50 years for captive use with

a reserve of 224 million tonnes. Ld. Counsel referred to

page 170 of the application for bail to show that the

Government of India amended the Mines and Minerals

(Development & Regulation) Act, 1957 in March, 2015 and

as such iron ore mines which were recommended by the

Odisha Government under the orders of the Hon'ble

Supreme Court were made ineligible for allotment and

hence allotment of mines was cancelled. Ld. Counsel

submitted that the company was assured iron ore mines in

2002 which were denied to the company and in the year

2014, the Hon'ble Supreme Court deallocated all the coal



blocks allocated between 1993 and 2010 and also

Government of India cancelled the linkage of coal to the

companies compelling the company to procure coal from

open market/auction/import thereby resulting in losses.

31. Ld. Sr. Counsel submitted that the case of Sanjay Chandra

Vs CBI 2012 (1) SCC 40 pertained to financial loss of

Rs.1,80,000 crores and the case of Shivani Rajiv Saxena Vs

Directorate of Enforcement & Anr. pertained to losses of

Rs.32000 crores, but still the bail was granted to the

accused. Ld. Counsel referred to para 16 of Suresh Kalmadi

Vs CBI 2012 (1) JCC 734, which is as under:

16. As regards delay in trial, it may be noted that thechargesheet was filed on the 20th May, 2011 andthereafter twice supplementary chargesheets with listof witnesses and documents have been filed. After thechargesheet was filed, time was consumed inproviding it in Eform with hyperlinking. After thescrutiny of the supplementary charge, the matter willnow be listed for arguments on charge. Though thelearned Trial Court has directed that the trial beconducted on day to day basis, however, in the maincharge sheet itself 49 witnesses have been cited.Thereafter, further witnesses have been cited in thetwo supplementary charge sheets. Thus, the trial islikely to take time.

32. Therefore, the Ld. Counsel submitted that in present case

also further investigation is going on; there are 25 accused

at present; trial still take long time and the accused cannot

be kept in custody for infinity.

33. Ld. Counsel submitted that as the prosecution has filed



incomplete chargesheet, the applicant is entitled to bail u/S

167(2) of Cr.P.C. Ld. Counsel referred to page 10 of the

reply filed to the bail application where ED has stated that

the accused had employed a number of shell companies

(more than 1000 on the last count) which carried out

thousands of circular transactions at the behest of the

accused and it is a mammoth task to investigate each and

every entry and to trace the ultimate parking place of the

proceeds of crime.

34. Ld. Counsel submitted that the accused has not been

summoned by CBI and at most, the offence made out

against the accused is falsification of accounts u/S 477(A)

of IPC and not of cheating. Section 477(A) IPC is not a

scheduled offence and ultimately the entire prosecution

initiated by ED will fail if CBI does not files a chargesheet

for scheduled offence against the accused.

35. Ld. Counsel submitted that contrary to earlier allegations

of proceeds of crime being Rs.47000 crores, the proceeds of

crime in the complaint is Rs.4025.23 crores and ED has

attached assets worth this amount. Ld. Counsel submitted

that no money has been siphoned off and referred to page

99 of the complaint to show that the accused has invested

his ancestral property for equity and it is the case of window

dressing for achieving targets. The money taken out from

BPSL is less and the money returned back is more. As per

the allegation of ED, a sum of Rs.2348 crores was made



from BPSL accounts, but investment in BPSL by other

companies like M/s Jasmine Steel Trading Ltd. is to the

extent of Rs.3330.09 crores and was to make the debt

equity ratio healthy so that the company continues to

survive. He submitted that all the funds have been routed

back. All the assets have been mortgaged to the bank and

even the shares have been pledged to the bank. The assets

of the company are not less than Rs.40,000 crores at

present.

36. The Ld. Counsel submitted that the server of the company

was in Odisha and merely deletion of electronic data from

the computer system will not destroy the data stored on the

server and further the ED is investigating with regard to the

same that is why the complaint is silent in this regard. Ld.

Counsel submitted that bail was granted in the case of

Shameet Mukherjee Vs CBI, 2003 (70) DRJ 327, CBI Vs

Vishal Mehan & Ors. in RC No. 33(A)/2016 as well as in the

case of CBI Vs I.M.Quddusi etc. vide orders dated

27.09.2017, though there were apprehensions of tampering

of evidence and winning over the witnesses by the accused.

The Ld. Counsel submitted that the applicant/accused is

facing the inquiry and joining investigation in Income tax

matter since 21.02.2014 and there is no allegation that the

applicant/accused has tampered with any evidence or has

tried to influence any witness. Reference was also made to

the case of Sandeep Jhunjhunwala Vs CBI in Bail

Application No.2439/2017 decided on 21.12.2017 to



submit that when the evidence is primarily documentary in

nature and in possession of Official Liquidator over which

the accused would have no access, the accused was granted

bail.

37. With regard to the statements recorded u/S 50 of PML

Act, reliance is placed on Parasmal Lodha Vs Asst. Director,

Directorate of Enforcement 2017 SCC Online Delhi 8676

where it was held that the statements u/S 50 of the Act,

2002 have to be tested during trial. Reliance is also placed

on Gaurav Gupta Vs Director of Enforcement in Bail

Application No.484/2015 decided on 29.05.2015 to

contend that the statements recorded u/S 50 of PML Act

after arrest of the petitioner would be inadmissible being hit

by Article 20 (3) of the Constitution of India.

38. The Ld. Counsel referred to the judgment in the case of

P.Chidambaram (supra) to submit that the allegations

would have to be established in trial wherein the

accused/coaccused would have the opportunity of putting

forth their case, if any, and an ultimate conclusion would be

reached. In this judgment, it is reiterated that so far as

statements recorded u/S 50 of PML Act are concerned, the

complicity of the accused will have to be established in the

trial and if convicted, he will undergo sentence.

39. Submissions on behalf of Ld. SPP for ED: Ld. SPP for

ED read Section 41 of Cr.P.C and Section 3, 19 and 24 of



PML Act, 2002 and submitted that whereas u/S 41 of Cr.P.C

accused can be arrested on reasonable suspicion, but u/S 19

of under PML Act, 2002, there should be material in the

possession of ED officers on the basis of which the ED

officers have reasons to believe that any person is guilty of

an offence under this Act, only then he is arrested and the

grounds of such arrest are informed to the accused.

Moreover, under Section 19 (2) of PML Act, 2002, the

Arresting Officer forwards a copy of order alongwith the

material in his possession to the Adjudicating Authority in a

sealed envelope. He submitted that the Arresting Officer has

a huge responsibility before effecting arrest of the accused

under PML Act. Relying on Section 24 of the Act, Ld.SPP for

ED submitted that there is a presumption that proceeds of

crime are involved in the Money Laundering unless the

contrary is proved. Ld. SPP for ED also pressed the twin

conditions u/S 45 of PML Act after its amendment.

40. The Ld.SPP for ED submitted that Rs.47000 crore may not

be the proceeds of crime, but how much is the proceed of

crime is still being probed by ED and the investigation

cannot be restricted. The trial in this complaint will

commence without waiting for completion of remaining

investigation.

41. So far as no action by CBI is concerned, Ld. SPP for ED

submitted that the ED has to act with alacrity otherwise

there is apprehension of proceeds of crime being deprived



of attachment.

42. To the argument that other 24 persons were not arrested,

Ld.SPP for ED submitted that this accused is the mastermind

and the main beneficiary of the offence and was in the

helms of affairs. He is first among equals. He submitted that

for economic offences, jail and not bail is the rule. He

submitted that there is sufficient material to proceed against

the accused and the grant of bail is a matter of discretion

with this Court. He submitted that there is no doubt that

there are large number of accused persons and completion

of formalities u/S 207 Cr.P.C itself will take time as there

are 15000 documents and further investigation is going on

for which this Court had given the permission to ED at the

time of taking cognizance. Therefore, supplementary

chargesheet would be filed and the nature of offence and

magnitude of proceeds of crime is such that the trial will

indeed take time. So far as medical grounds of the applicant

are concerned, the Ld.SPP for ED submitted that the same

are before the Court and the accused is an elderly person.

43. Rebuttal: In rebuttal, Ld. Counsel for the accused

submitted that after the twin conditions were set aside by

the Hon'ble Supreme Court in the case of Nikesh Tarachand,

they have not revived by the Amendment Act. Reliance is

placed on Sameer M.Bhujbal Vs AD, Directorate of

Enforcement, Dr.Vinod Bhandari Vs AD, Directorate of

Enforcement and Upender Rai Vs Directorate of



Enforcement 2019 SCC Online Delhi 9086. The Ld. Counsel

submitted that proportionality of the offence is to be

considered for sentencing and relied on Anil Mahajan Vs

Commissioner of Customs & Ors. 2000 (2) JCC Delhi 302 in

this regard.

44. The decision: This Court has the benefit of having heard

lengthy arguments of Ld. Sr. Counsel for the accused as well

as Ld. SPP for ED while deciding the first application for bail

on 24.12.2019.

45. While discussing the submissions made, this Court shall

refer to such submissions and such facts which have now

come on record and are available for appreciation of this

Court after filing of complaint.

46. The first aspect which needs to be taken into account is

that the investigation is complete and chargesheet has been

filed with voluminous records running into 15000 pages.

The circumstances change after filing of chargesheet in

comparison to the circumstances applicable for bail during

investigation of first 60 days or 90 days as the case may be.

Now, the chargesheet has been filed and the Investigating

Agency had full opportunity to thoroughly investigate the

matter and the detailed complaint accompanied with large

number of documents also shows that the exercise of ED is

mainly complete.



47. The complaint mentions at several places that further

investigation is going on. There are more than 1000 shell

companies used for the purposes of commission of offence

by the accused. Investigation in that regard is yet to be

conducted and completed. Taking note of the submission

made in the complaint, this Court while taking cognizance

of the offence has also granted permission to ED to conduct

further investigation and liberty to place the material that

comes to its notice on record before this Court.

48. Ld. SPP for ED also submitted that the trial is going to be a

time consuming process in as much as there are 25 accused

and completion of formalities under Section 207 Cr.P.C,

filing of supplementary complaints etc. will take time.

49. The Ld. Counsel for the accused has sought to submit two

arguments regarding pending investigation. First, the

chargesheet is incomplete and filed only to defeat the right

of bail to the accused on completion of 60 days and second,

in case the investigation is pending, the same would be a

time consuming process and the accused cannot be kept in

jail for indefinite period.

50. This Court does not agree with the first submission of Ld.

Counsel for the accused that ED has filed incomplete

chargesheet. Although, further investigation is going on, but

it cannot be said that the chargesheet is not complete qua

the accused. However, it is common case of both the parties



that trial is not going to end soon. This is one favourable

factor in favour of the accused.

51. The other aspect which this Court is taking into

consideration is that when the first bail application was

dismissed, there was possibility that the investigation may

result in proceeds of crime to the extent of Rs.27,704 crores.

At that time the submission made was that the total loan

amount defaulted by M/s BPSL was Rs.47,204 crores and

the offer by M/s J.S.W Steels was Rs.19500 crores giving

apprehension that the proceeds of crime was Rs.27,704/.

52. Now the ED has restricted the proceeds of crime to

Rs.4229.54 crores. Though, this amount of proceeds of

crime is far far less than the initial apprehension of proceeds

of crime being Rs.27,704 crores, but even this amount is not

a small amount.

53. In this regard, the submissions of Ld. Counsel for the

accused needs to be noted here. The Ld. Counsel has

referred to the report prepared by Interim Resolution

Professional Sh.Mahender Kumar Khandelwal opining that

the assets of the company are not less than 41000 crores. It

is to be noted that the company had become defaulter in

paying the interest w.e.f 2015 and the balance is

accumulation of interest. The submission of Ld. Counsel for

accused is that when the down payment is made, the assets

get depressed offers and that is the reason the offer given by



M/s J.S.W Steel is 19,500 crores. This shows that there is no

siphoning of funds of the kind as was apprehended at the

time of decision of first application for bail.

54. Moreover, Ld. Counsel for the applicant/accused has

referred to the complaint itself to argue that it is a case of

circular transaction. The common case of the parties is that

for improving debt equity ratio, the company has resorted to

taking the money of the company and routing back through

various channels as equity of the accused and his family

members so that they continue to get financial support of

the banks. The submission is made to show that money was

not swindled by the accused, but was rerouted in the

company for the larger interest of the company itself.

55. The Ld. Counsel has drawn attention to the fact that the

company was initiallty assured coal mines and iron ores, but

later on were denied to the company. Though, there was a

decision of the Hon'ble Supreme Court in favour of the

company, but the law underwent a change constraining the

company to purchase coal and iron ores from open market

on the basis of commercial transactions which caused the

fortunes of the company to nose dive.

56. Be that as it may, although the character of the funds of

the company changed from the assets of the company to the

equity of shareholders, neverthless, the sum result is that

the funds have been pooled in the company and not taken



away.

57. The Ld. Counsel has also pointed out that as against the

funds of Rs.2348 crores taken out from the company, the

company has reinvested Rs.3330.09 crores which shows the

bonafides of the accused.

58. Though, there may not be any financial loss in strict sense,

but for this dubious device followed by the company, they

would face the consequence at the end of the trial.

59. What is also weighing with this Court is that ED has

efficiently succeeded to attach a sum of Rs.4,229.54 crores

by way of Attachment Orders and has, therefore, reached

the proceeds of crime and safeguarded the money of the

banks.

60. The company and all its records are in the possession of

Interim Resolution Professional, therefore, there would not

be any apprehension of tampering with the records.

Coupled with the above, this Court is also taking into

consideration that the offence u/S 3 of PMLA is punishable

with imprisonment of seven years, which as per various

provisions of Cr.P.C is not considered heinous as offences

punishable with imprisonment beyond seven years, life

sentence and death sentence are considered as heinous.

61. Initially Ld.SPP for ED had not objected with regard to



twin conditions attached to the Section 45 of PML Act when

the first bail was decided, however, this time Ld.SPP has

objected and argued that after amendment in PML Act, the

conditions u/S 45 stands revived. However, the case law

referred by ld. Counsel for the applicant/accused namely

Upender Rai (supra), Sameer M.Bhujbal (supra) and

Dr.Vinod Bhandari (supra) shows that the Superior Courts

have held that after the conditions were set aside in Nikesh

Tarachand case, they have not been revived at the time of

amendment in PML Act, 2002.

62. Thus, keeping in mind that chargesheet/complaint has

been filed, there will be considerable delay in filing of

supplementary complaint and completion of trial, ED has

efficiently secured and safeguarded the proceeds of crime

by Attachment Orders, considering the reasons alleged by

the accused for circular rotation of funds, the factors which

were beyond the control of the company rendering it a

defaulter and considering that the offence is punishable u/S

3 with imprisonment of seven years, this Court is of the

opinion that the applicant is entitled to bail. Moreover,

there is no apprehension of accused not attending the trial

as he has roots in the society. There is no apprehension of

tampering with evidence as all the records are already with

the Interim Resolution Professional. Keeping in mind the

aforesaid circumstances, the application for bail is allowed

subject to the condition that the accused/applicant

Sh.Sanjay Singal will furnish two sureties in the sum of



Rs.10 Lakhs each, he will surrender his passport with the

Court, he will not leave the country without the permission

of the Court, he will not try to tamper with the evidence and

will not try to influence the witnesses and he will cooperate

with the ED so far as further investigation is concerned.

63. The bail application stands disposed off.

64. It is made clear that nothing observed in this order shall

effect the case of either party which shall be decided

independent of observations made in this order.

ANNOUNCED IN THE OPEN COURTON THIS 24th Day of JANUARY, 2020

(ARUN BHARDWAJ) SPECIAL JUDGE [P.C. ACT] [CBI]05 ROUSE AVENUE DISTRICT COURT

NEW DELHI/24.01.2020



in the court of shri arun bhardwaj special judge [ p.c ...€¦ · sidharth luthra, ld. sr.counsel,...

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