Case BriefsSupreme Court

Supreme Court: In a corruption case involving misappropriation of more than Rs 30.00 crores, the Division Bench comprising of Indira Banerjee and V. Ramasubramanian, JJ., granted bail to Alok Kumar Agrawal, former In-charge Executive Engineer of Chhattisgarh’s Water Resources Division, who was booked under Prevention of Money Laundering Act, 2002.

The allegation against the applicant was that while he was posted as In-charge Executive Engineer, Water Resources Division – Bilaspur, a public servant, in conspiracy with other accused, prepared forged documents and records and thereby misused and abused his official position and not only caused financial loss to the Government but also amassed huge wealth to the extent of more than Rs. 30.00 crores by corrupt and illegal means which was alleged to be disproportionate to his known sources of income.[i]

Initially, an FIR was registered by the Economic Offences Wing –Anti Corruption Bureau against the applicant for alleged commission of offence punishable under Sections 13(1)(e) and 13(2) of Prevention of Corruption Act, 1988 and Sections 109, 120-B, 420, 467, 468 and 471 of the Penal Code, 1860 and the EOW-ACB charge-sheeted the applicant on 15-06-2015. Since these offences were scheduled offences, the Directorate of Enforcement (ED) registered a case under the Prevention of Money-Laundering Act, 2002 against the applicant. The applicant had been in custody since 11-10-2018.[ii]

Considering the arguments of the applicant and the stand taken by the Enforcement Directorate, the Bench granted bail to the applicant on the following grounds:

  1. His disability;
  2. The fact that he has been released on bail in connection with the FIR for the scheduled offences on 23.08.2019; and
  3. That he is under detention in connection with the complaint under the Prevention of Money Laundering Act from October, 2018. In other words, the petitioner had undergone more than 2½ years of imprisonment even in connection with the complaint under the PMLA.

[Alok Kumar Agrawal v. Directorate of Enforcement, Special Leave to Appeal (Crl.) No(s). 544-545 of 2021, decided on 12-07-2021]

Kamini Sharma, Editorial Assistant has reported this brief.

Appearance by:

For Petitioner(s): Siddharth Mittal, Adv., Prabhat Kumar, Adv. and Manju Jetley, AOR

For Respondent(s): Tushar Mehta, SGI, Zoheb Hussain, Adv., Sairica Raju, Adv., Kanu Aggarwal, Adv. and Mukesh Kumar Maroria, AOR

[i] Alok Kumar Agrawal v. State of Chhattisgarh, 2017 SCC OnLine Chh 512

[ii] Alok Kumar Agrawal v. Directorate of Enforcement, MCRC No. 6533 of 2019

Case BriefsHigh Courts

Orissa High Court: S.K. Panigrahi, J., while addressing a matter with regard to money laundering by way of ponzi schemes, stated that,

“Act of money laundering is done in an exotic fashion encompassing a series of actions by the proverbial renting of credibility from the innocent investors.”

Petitioner has sought bail in a complaint case pending before Sessions Judge, Special Court under PMLA.


Case under Sections 406, 420, 468, 471 and 34 of Penal Code and Sections 4, 5 and 6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 was registered on the basis of a complaint alleging that the complainant had been cheated and defrauded by alluring to invest Rs 10,000 in the attractive investment scheme of Fine Indiasales (P) Ltd.

Complainant further submitted that he had introduced 20 more people to invest in the said scheme.

Complainant neither received the financial product nor the product voucher as per the agreement with FIPL.

FIPL collected huge amounts of money from the public and ultimately duped huge amount from innocent public by giving false assurance of high return for their deposit of money.

In view of the above, complainant requested for an investigation.

FIPL floated a fraudulent scheme

According to the investigation it was found that, FIPL had floated a fraudulent scheme with a terminal ulterior motive to siphon off the funds collected from public.

Ponzi Scheme

The advertised scheme of FIPL, ex-facie appeared to be a bodacious Ponzi scheme, inducing the susceptible depositors by way of misrepresentation, promising immediate refund in case of any default and timely payment of return on the part of FIPL.

Investigation prima facie established that the accused persons connected with  FIPL not only criminally conspired and cheated the depositors but also lured them into the scheme with a rogue mindset.

Machiavellian Layering | Shell Companies

Investigation revealed that the said money, stained with the sweat, tears and blood of multitudes of innocent people has since been moved around and subjected to Machiavellian layering through a myriad of shell companies and bogus transactions.

The collected amount was immediately transferred to different bank accounts of individuals as well as firms under the management and control of the Promotors/Directors/Shareholders of the said FIPL which is nothing but an act of sheltering.

Money Laundering

Modus Operandi adopted while transferring the prodigious sum of ill-gotten wealth with the singular intention of concealing the original source of funds and to project the tainted money as untainted ex facie constitute the offence of money laundering.

Court’s Observation

On the cursory look, Court prima facie observed that dishonesty, untruth and greed eroded the faith of common investors.

One of the significant stages of money laundering is “layering”, and in the present case, multiple use of corporate vehicles was done and the amount was layered further.

The act money laundering involves the process of placement, layering and integration of “proceeds of crime” as envisaged under Section 2 (u) of the Act, derived from criminal activity into mainstream fiscal markets and transmuted into legitimate assets.

“…laundering of tainted money having its origins in large scale economic crimes pose a solemn threat not only to the economic stability of nations but also to their integrity and sovereignty.”

Proceeds of Crime

Petitioner along with others attempted to project the “proceeds of crime” as untainted money by transferring the same to different bank accounts in a bid to camouflage it and project it to be genuine transactions.

Financial Terrorism

Bench added to its analysis that, offence of money laundering is nothing but an act of “financial terrorism” that poses a serious threat not only to the financial system of the country but also to the integrity and sovereignty of a nation.

Supreme Court’s opinion

Supreme Court of India has consistently held that economic offences are sui generis in nature as they stifle the delicate economic fabric of a society.

Faustain bargain

Perpetrators of such deviant “schemes,” including the petitioner in the present case, who promise utopia to their unsuspecting investors seem to have entered in a proverbial “Faustian bargain” and are grossly unmindful of untold miseries of the faceless multitudes who are left high and dry and consigned to the flames of suffering.

Reputational Damage of the Country

Abuse of financial system in the manner that occurred in the present case can inflict the reputation of the country in the world of business and commerce.

Alleged offence of money laundering committed by the petitioner is serious in nature and the petitioner’s role is not unblemished.

Hence, Court refused bail to the accused/petitioner. [Mohammad Arif v. Directorate of Enforcement, Govt. of India, 2020 SCC OnLine Ori 544 , decided on 13-07-2020]

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