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Allahabad High Court rejects anticipatory bail application of accused in the NRHM scam

The Application has been filed seeking anticipatory bail apprehending arrest in the case registered dated april 14, 2012 under Section 3/4 of Prevention of Money Laundering Act, 2002, Enforcement Agency E.D., District Lucknow.

The Allahabad High Court on Thursday rejected the anticipatory bail application of an accused in the National Rural Health Mission Scheme Scam, filed by the erstwhile sleeping Director of M/s Surgicoin Medequip Pvt. Ltd.

A Single Bench of Justice Chandra Dhari Singh passed this order while hearing a Criminal Misc Anticipatory Bail Application U/S 438 Cr.P.C. filed by Pankaj Grover.

The Application has been filed seeking anticipatory bail apprehending arrest in the case registered dated april 14, 2012 under Section 3/4 of Prevention of Money Laundering Act, 2002, Enforcement Agency E.D., District Lucknow.

I. B. Singh, Senior Counsel appearing for the applicant has submitted that the applicant is the erstwhile sleeping Director of M/s Surgicoin Medequip Pvt. Ltd. The respondent lodged the instant Enforcement Case Information Report (ECIR) against all the persons named in F.I.R. New Delhi Dated January 02, 2012. The applicant was never named in the predicate offence and no first information report was lodged against him.

He has also submitted that the applicant was also not named in the ECIR and no role whatsoever has been assigned in the ECIR.

Singh has submitted that the High Court order dated November 15, 2011 passed in petition directed the Central Bureau of Investigation to conduct a Preliminary Enquiry in the matter of execution and implementation of National Rural Health Mission (NRHM) and utilization of funds at various levels during such implementation in the entire State of Uttar Pradesh and also directed to register regular cases in respect of the persons against whom prima facie cognizable offence is made out in accordance with law.

It is submitted that in pursuance to the aforementioned orders of the Court, five separate preliminary enquiries were registered in different branches of CBI. 

On January 02, 2012, a first information report was registered by CBI under Sections 120-B r/w Sections 420, 409 of IPC and Section 13(2) r/w Section 13(1)(d) of the Prevention of Corruption Act against several persons.

Further, Directorate of Enforcement lodged an Enforcement Case Information Report dated April 14, 2012 against all the persons named in the FIR . Thereafter, Directorate of Enforcement passed an order of Provisional Attachment dated April 05, 2017 and provisionally attached two of the properties.

It is further submitted that Directorate of Enforcement preferred Original Complaint on May 11, 2017 under Section 5(5) of the Prevention of Money Laundering Act, 2002 (PMLA) being before Adjudicating Authority, PMLA, New Delhi seeking confirmation of the Provisional Attachment Order dated April 05, 2017 which judgment and order dated September 13, 2017 confirmed the order of Provisional Attachment. Thereafter, Directorate of Enforcement filed Complaint under Section 45 of PMLA against M/S Surgicoin Mediquip Pvt. Ltd., Naresh Grover, Pankaj Grover, Abhay Kumar Bajpai.

I. B. Singh, Senior Counsel said that accusations have been made only with ulterior motive and offence under Section 3 of PMLA cannot be made out against the applicant as none of the essentials of Section 3 has been met in the case in respect of the applicant. He said that Section 3 of PMLA mandates the existence of ‘Proceeds of Crime’, however, in this case, there are no ‘Proceeds of Crime’.

Senior Counsel further said that in the case, the properties in question were acquired by the applicant in the year 2002 and 2001 and the alleged year of commission of crime is 2010-11. The properties in question were never owned by the applicant nor the sale consideration of the properties was paid by the applicant. Hence, no question of proceeds of crime arises.

It is also submitted that the maximum punishment provided for alleged commission of offence under Section 3 of PMLA is from 3 to 7 years in terms of Section 4 of PMLA and the Supreme Court in a catena of judgments while citing Section 41 and 41A of Cr.P.C. has held that where the arrest is not required for the offences punishable upto 7 years, the arrest shall not be made.

S.B. Pandey, Assistant Solicitor General appearing for respondent/Directorate of Enforcement has sought dismissal of the anticipatory bail application and submitted that in terms of the twin conditions prescribed in Section 45 of PMLA, the Court could grant anticipatory bail to the applicant only after recording a satisfaction that there were reasonable grounds for believing that the applicant was not guilty of the alleged offence and that while on bail he was not likely to commit any offence.

Pandey further submitted that a perusal of the voluminous oral and documentary evidence collected during the course of investigation has revealed that Naresh Grover, Director of M/s Surgicoin Medequip Pvt. Ltd. in connivance with his son Pankaj Grover has been constantly trying to manipulate the records to conceal the “Proceeds of Crime” and has also clandestinely sold off half of the factory property after knowledge of initiation of proceedings under the PMLA.

He said that the written directions given by Naresh Grover to his son Pankaj Grover, which were recovered during the search clearly establish that the said persons in possession or use of the property acquired out of/in lieu of “Proceeds of Crime” in the instant case were prone to encash/sell the same at the earliest opportunity to frustrate the proceedings under this Act and thus, the properties identified in their hands in lieu of “Proceeds of Crime” were attached.

It is also submitted that in the case, the investigation has established that Proceeds of Crime to the tune of Rs.21,20,87,617/- has been generated.

It is submitted that the investigation has further revealed that out of the said “Proceeds of Crime” a sum of nearly Rs.10 Crore has been paid by way of bribe/commission to various officials and ministers and their associates leaving the balance “Proceeds of Crime” of about Rs.11 Crore in the hands of M/s Surgicoin Medequip Pvt. Ltd. However, the said sum has been siphoned off by manipulating records and showing fictitious transactions to frustrate the proceedings under PMLA.

In view of the above, it can safely be concluded that the twin conditions as imposed by Section 45 of PMLA cannot be looked into while deciding the bail/anticipatory bail application as the same are violative of Articles 14 and 21 of Constitution of India. Thus, the contention advanced by Pandey in respect of applicability of Section 45 cannot be accepted, the Court said.

Senior Counsel appearing for the applicant by placing reliance on several judgments of the Supreme Court has submitted that there is no restriction in Section 438 Cr.P.C. to entertain a prayer for anticipatory bail in respect of a person accused in economic offence. There is no such prohibition to entertain such prayer in respect of accused persons indicted in economic offences in Section 438 of Cr.P.C., provided the offence committed is non-bailable one.

The Court said that, it is only in respect of offences as enumerated under Section 438(4) of Cr.P.C. and also in respect of offence under special statute wherein jurisdiction under Section 438 of Cr.P.C. has been specifically ousted, even if the offences are non-bailable, a person cannot invoke the jurisdiction under Section 438 of Cr.P.C. seeking pre-arrest bail.

The Court noted that,

In the case, during the course of investigation under the PMLA, 2002, searches were conducted under Section 17 of PMLA, 2002 at the office, factory and residential premises of Naresh Grover, Director of M/s Surgicoin Medequip Pvt. Ltd. During these searches several incriminating documents were seized. These documents included letters written by Naresh Grover, who was in judicial custody at that time, to his son Pankaj Grover directing him to manipulate the accounts and records to defeat the allegation of supply of material under NRHM Scheme at astronomical rates of profit as well as of short supply of the said material.

In the statements recorded under Section 50 of PMLA, 2002 both Pankaj Grover as well as Rajendra Kaul have admitted that the profit margin on procurement/manufacture of certain items ranged up to 200%. Moreover, the fact that Naresh Grover had directed Pankaj Grover in writing not to submit the original invoices and the ledgers of the sundry creditors and debtors to the ED as well as to manipulate the records of the genuine creditors with other fictitious entries establishes that he was wilfully and knowingly trying to frustrate the proceedings under the Act and was also attempting to deflect the process of investigation.

“A perusal of the voluminous oral and documentary evidence collected during the course of investigation has revealed that Naresh Grover, Director of M/s Surgicoin Medequip Pvt. Ltd. in connivance with his son Pankaj Grover has been constantly trying to manipulate the records to conceal the “Proceeds of Crime” and has also clandestinely sold off half of the factory property after knowledge of initiation of proceedings under the PMLA. The written directions given by Naresh Grover to his son Pankaj Grover, which were recovered during the search clearly establish that the said persons in possession or use of the property acquired out of/in lieu of “Proceeds of Crime” in the instant case were prone to encash/sell the same at the earliest opportunity to frustrate the proceedings under PMLA, the Court observed.

“In socio-economic offences the proceeds of crimes are larger and further, offenders are economically sound, therefore, in releasing them on bail/anticipatory bail probability of abscondence not within country but beyond country is more probable. Usually socio-economic offenders abscond to some other country and after that it becomes difficult to bring them back and complete the criminal proceeding against them. Further, their monetary sound condition, particularly the proceeds of crime obtained not by honest working but by deceiving others, causes more prone situations for influencing witnesses and other evidence. Furthermore, status and position of offender provides opportunity to influence investigation and prosecution”, the Court said.

“For the discussions made hereinabove and keeping in view the principles settled by the Supreme Court, the Court finds no merit in the application under Section 438 CrPC filed by the applicant. Consequently, the anticipatory bail application is rejected,” the Court ordered.

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