Introduction
In a significant decision, the High Court of Jharkhand (‘High Court’) in the case of Hemant Soren v. Directorate of Enforcement[i] decided the bail application filed by Hemant Soren (‘Petitioner’), former Chief Minister of Jharkhand at the time of his arrest, under s. 45 of the Prevention of Money Laundering Act, 2002 (‘PMLA’). The Directorate of Enforcement (‘ED’) filed the case, alleging fraudulent acquisition and possession of a property measuring 8.86 acres in Baragain, asserting that the property was acquired through illegal activities, thus constituting proceeds of crime.
Facts
The ED arrested the Petitioner in relation to the enforcement case information report ('ECIR') filed on 26.06.2023 under s. 3 of the PMLA, punishable under s. 4 of the PMLA. The investigation began with the fraudulent acquisition of land owned by the Ministry of Defence (‘MoD’), leading to the identification of private individuals and government officials involved in a land-grabbing syndicate.
Incriminating documents, including property documents and 17 original registers, were recovered from Bhanu Pratap Prasad, Revenue Sub Inspector, Circle Office, Baragain, Ranchi. Thereafter, a case bearing no. 272/23 was registered at Sadar Police Station based on the seized documents, implicating the petitioner in illegally acquiring 8.86 acres of land at Shanti Nagar, Baragain, Bariatu Road.
A prosecution complaint ('Complaint') was filed under the PMLA against the Petitioner and several other accused. The background of sharing information under s. 66(2) of the PMLA revealed that during the investigation of another case, land with an area of 4.45 acres belonging to the MoD was fraudulently acquired by private persons in connivance with government officials on the basis of a false deed, falsification of government records, and tampering with original revenue documents.
The Complaint further highlighted the Petitioner’s involvement in a land fraud scheme. It also alleged that the Petitioner, along with Bhanu Pratap and others, was part of a syndicate engaged in acquiring land through fraudulent means, including tampering with government records and creating false documents.
On 29.01.2024, searches were conducted under s. 17 of the PMLA. Cash amounting to Rs. 36,34,500 and a BMW were seized from the premises under the petitioner's use and occupation.
After the Petitioner was summoned, Raj Kumar Pahan, an accomplice, filed an application with the Deputy Commissioner of the SAR Court to cancel the jamabandis of previous occupants. The SAR Court, vide order dated 29.01.2024, cancelled the jamabandis of the earlier occupants, thereby enabling the accused, Raj Kumar Pahan, to acquire the property on paper in order to distance the Petitioner from the illegal occupation and possession of the subject property.
It was the case of the Respondent that the entire exercise by the SAR Court proved that the Petitioner misused his official position and created parallel false evidence in order to camouflage his possession of the property and to protect the property (‘proceeds of crime’) as untainted property.
The ED alleged that the petitioner had acquired the property through scheduled offences, making the provisions of the PMLA applicable. The ED’s case primarily focused on conspiracy, although s. 120B of IPC was removed from the formal FIR. Several statements recorded under s. 50 of the PMLA linked the petitioner to acquiring and possessing the disputed land.
Held
The High Court allowed the application filed by the Petitioner and granted bail to the Petitioner.
The High Court observed that the statements recorded under s. 50 of the PMLA included a verification report detailing the property measuring 8.86 acres and stated that the Petitioner owns the property. However, such statements did not directly link the Petitioner to the alleged offences.
The High Court reviewed the order dated 03.05.2024, passed in W.P. (Cr.) No. 68 of 2024, passed by the Division Bench of the High Court, which had invalidated the submissions of the Petitioner that there was no scheduled offence and, therefore, no case of money laundering was made out. The High Court observed that the changed circumstances and filing of the prosecution and supplementary prosecution complaints created a new scenario. Thus, it held that the present case, being an application of bail and operating in an entirely different sphere and in view of the changed circumstances, would not be shackled by the observations made in W.P. (Cr.) No. 68 of 2024.
The High Court acknowledged the significant circumstantial evidence presented by the ED but noted that the numerous registers and revenue records did not directly implicate the petitioner or his family members
The High Court observed that the order delivered by the SAR court dated 29.01.2024 had been persuaded in which the land was ordered to be restored in favour of Raj Kumar Pahan. However, the said order has obtained finality in the absence of any challenge mounted to it by another side. It further held that considering the reasons given in the said order, it cannot be concluded to be an order fraught with baseless reasonings.
Finally, the High Court concluded that based on the evidence presented, the Petitioner fulfilled the twin conditions under s. 45 of the PMLA requires ‘reason to believe’ that the petitioner is not guilty and is unlikely to commit an offence while on bail. The High Court referred to the case of Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra[ii] to support its decision, emphasising that the evidence should be considered based on broad probabilities rather than meticulous examination.
Our Analysis
The decision rendered by the High Court emphasises the fulfilment of the conditions laid down under s. 45 of the PMLA for the grant of bail. S. 45 of the PMLA stipulates that the accused needs to discharge the burden of proof by showing that there is no reasonable ground for believing that the accused is guilty of the offence and is not likely to commit any offence when enlarged on bail. S. 45 has come under severe criticism for being unconstitutional and arbitrary. However, its constitutional validity was upheld in the decision rendered by the Hon’ble Supreme Court (‘Supreme Court’) in Vijay Mandanlal Chaudhary v. Union of India[iii].
In this case, the High Court found that, based on broad probabilities rather than a meticulous examination of the evidence presented by the ED, the petitioner did not appear to have committed the offence. Consequently, the petitioner was granted bail. However, the ED has challenged this ruling before the Supreme Court. The outcome of the Supreme Court proceedings remains to be seen.
End Notes
[i] 2024 SCC OnLine Jhar 2042.
[ii] (2005) 5 SCC 294.
[iii] 2022 SCC OnLine SC 929.
Authored by Kushagra Gahlot, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.