Allowed

Mohan Kumar v. Govt. of India Thru. Assistant Director Directorate of Enforcement

Allahabad HC27 May 2024/1059/2024

Case brief

AI extract

What is this about?

High Court granted anticipatory bail to Mohan Kumar charged under PMLA and PC Act for alleged diversion of coal. Court held facts sufficed for bail despite allegations of breach of trust and cheating, noting co-accused bail and lack of damage to seller.

What did the court decide?

Granted anticipatory bail on personal bond with two sureties, subject to conditions including appearance, no tampering, and no leaving India.

Mohan Kumar Vs Govt. of India Thru. Assistant Director… — Money Laundering | Allahabad HC (2024)

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Neutral Citation No. - 2024:AHC-LKO:40274

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Court No. - 19

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Case :- CRIMINAL MISC ANTICIPATORY BAIL APPLICATION U/S 438 CR.P.C. No. - 1059 of 2024

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Applicant :- Mohan Kumar Opposite Party :- Govt. Of India Thru. Assistant Director Directorate Of Enforcement Counsel for Applicant :- Himanshu Hemant Gupta Counsel for Opposite Party :- Rohit Tripathi

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Hon'ble Subhash Vidyarthi,J.

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Heard Sri Himanshu Hemant Gupta, Advocate, the learned counsel for the applicant as well as Sri Rohit Tripathi, learned counsel for the respondent/Directorate of Enforcement and perused the records.

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The instant application has been filed by the applicant seeking anticipatory bail in Complaint Case No.08 of 2022, arising out of ECIR/01/VSI/LZO/2012 & ECIR/03/VSI/LZO/2012, under Sections 3/4 Prevention of Money Laundering Act, 2002, registered at Police Station Directorate of Enforcement, Varanasi Sub Zonal Office, District Allahabad.

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The Central Bureau of Investigation has lodged F.I.R. No.RC00620011A0006, under Sections 120-B, 420, 467, 468, 471 I.P.C. and Section 13 (2) read with Section 13 (1) (d) of Prevention of Corruption Act, 1988, Police Station SPE/ACB, Lucknow pertaining to M/s Jai Durga Industries and F.I.R. No.RC00620011A0008, under Sections 120-B, 420, 467, 468, 471 I.P.C. and Section 13 (2) read with Section 13 (1) (d) of Prevention of Corruption Act, 1988, Police Station SPE/ACB, Lucknow, M/s Drolia Coke Industries, both lodged on 13.04.2011 against the applicant and unknown officers/officials of the District Industries Center, District Chandauli and unknown officers/officials of Northern Coalfields Ltd. alleging that the above said firms/Companies had received raw material i.e. coal, from the coalmine projects of Northern Coalfields Limited (NCL) under the new coal distribution policy of the Government of India through Fuel Supply Agreement dated 30.04.2008 and it is selling the coal in the black market without processing it into special smokeless fuel (SSF).

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The C.B.I. has submitted a charge-sheet on 31.05.2012 against the Director of M/s Jai Durga and Drolia Industries during the period 2010-11 and purchase of coal from the companies. The applicant herein purchased coal from M/s Jai

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Durga and M/s Drolia Coke Industries.

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After submission of the charge sheet by the Central Bureau of Investigation, the Directorate of Enforcement (ED) has filed a complaint no.8 of 2022 on 22.06.2022 in the Court of learned Sessions Judge, Allahabad against 6 persons, including the applicant. The complaint has since been transferred to Special Judge/PMLA, CBI, Court No.5, Lucknow and it has been renumbered as Sessions Case No.124 of 2023.

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Regarding the applicant, it is stated in para 7 of the complaint filed by the Directorate of Enforcement that he is the proprietor of M/s Chandra Prakash Enterprises purchased SSF/undersized coal as genuine by forging sale invoices, creating forged ledgers and other books of accounts and diverted the subsidized/notified coal lifted from NCL and showed its bogus sale.

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A fuel supply agreement was entered into between Northern Coalfields Limited and Director's firm/company. Clause 4.4. and 15.1.5 of the aforesaid agreement provide as follows:

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"4.4. The total quantity of Coal supplied pursuant to this Agreement is meant for use at the M/s Drolia Coke Industries Private Limited, B-8 Industrial Area, Ramnagar, Chandauli (UP) as listed in Schedule-I. the Purchaser shall not sell/divert and/or transfer the Coal for any purpose whatsoever and the same shall be treated as material breach of Agreement. In the event that the Purchaser engages or plans to engage into any such resale or trade, the Seller shall terminate this Agreement forthwith without any liabilities or damages, whatsoever, payable to the Purchaser. It is expressly clarified that the Seller shall reserve the right to verify including the right to inspect/ call for any document from the Purchaser and physically verify the end-use of Coal and satisfy itself of its authenticity. The Purchaser shall have the obligation to comply with the Seller's directions/ extend full co-operation in carrying out such verification/ inspection.

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15.1.5 In the event that the Purchaser resells or diverts the Coal purchased pursuant to this 'Agreement', the Seller shall have the right to terminate this Agreement forthwith."

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The learned counsel for the applicant has submitted that at the most, it is a case of breach of agreement, the consequences whereof are provided in the agreement itself. He has further submitted that the co-accused persons who were the purchasers of coal from the firm/company of the applicant have been granted anticipatory bail by this court by means of order dated 12.09.2023 passed in Anticipatory bail No.1017 of 2023. It has further been submitted that the owner/directors of two other companies namely M/s Fertico Marketing and Investment Pvt. Ltd. and M/s Swastik Cement Products Pvt. Ltd. having similar

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roles have been granted anticipatory bail by this court vide order dated 22.09.2023, passed in Criminal Misc. Anticipatory Bail Application No.438 Cr.P.C. Nos.1640 of 2023 and 1641 of 2023. The Director of Companies, namely, Ratan Singh has also been granted Anticipatory Bail by this court vide order dated 22.09.2023 passed in Criminal Misc. Anticipatory Bail Application No.1923 of 2023.

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Sri Rohit Tripathi, the learned counsel for the respondent has vehemently opposed the bail application and he has submitted that it is not a case of breach of agreement simplicitor, rather it is a case of criminal breach of trust under Section 405 I.P.C. and cheating under Section 415 I.P.C.

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Section 405 of I.P.C. defines 'criminal beach of trust' which is as follows:

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"405. Criminal breach of trust.?Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust"."

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Prima facie, the sale of coal by NCL does not appear to be 'entrustment' as the NCL had sold the coal to the applicant's company with intention of transferring absolute rights, including the right to sell it further. It does not appear to be a case of entrustment.

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Sri Tripathi has next submitted that the act of applicant amounts to cheating also. Cheating is defined under Section 415 of I.P.C. which is as follows:

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"415. Cheating.?Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat"."

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For making out the offence of cheating, the following ingredients are required to be established:

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"i. Fraudulent and dishonest intention,

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ii. Inducement to a person for deception,

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iii. Causing of harm, damage to body, mind and reputation and property."

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Learned counsel for the applicant appearing on behalf of the applicant invited attention of this Court to a copy of the letter dated 11.02.2010 issued by the Coal India Limited in response to an application under the Right to Information Act, 2005 which specifically states that:-

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'there is no subsidy/financial support from central government to CIL and its subsidiary coal companies for sale of coal under fuel supply agreement.

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There is no subsidy provided by the State Government to CIL and its subsidiary coal companies for sale of coal under fuel supply agreement.

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The notification on rate of royalty on coal as notified by Government of India, Ministry of Coal and Cess on Coal notified by Government of West Bengal, are available with us.'

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Thus, it appears that the coal sold by NCL was not subsidized by the government and its rates had been notified. The Director's company has purchased the coal on rates which are not lower than the notified rates in any case. Therefore, prima facie it appears that no damage or harm has been caused to NCL by the act of the applicant, who is a purchaser of coal from Director's Company and was also not a party to the contract between Director's Company and NCL. It is also significant to note that the NCL has not filed any F.I.R. or any complaint alleging that the sale of coal by the applicant has caused any loss, damage or harm to it.

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Sri Rohit Tripathi, the learned counsel for the respondent has next submitted that the applicant has wrongfully gained money by sale of coal in open market in violation of the conditions of the agreement. He has referred to the definitions of 'wrongful gain' and 'wrongful loss' given in Section 23 of the I.P.C. which is as follows:-

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"23. "Wrongful gain".?"Wrongful gain" is gain by unlawful means of property to which the person gaining is not legally entitled.

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"Wrongful loss".?"Wrongful loss" is the loss by unlawful means of property to which the person losing it is legally entitled."

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For a wrongful gain, the property must have been gained by 'unlawful means' and the person gaining the property should not have been legally entitled to gain the same. Here the coal has been purchased by the Director under an agreement with NCL and therefore, it cannot be said that the property has been gained by 'unlawful means'. As there is no 'wrongful gain', there cannot be any 'wrongful loss' also and it has already been noticed that NCL has not complained about any loss having been caused to it by the offending act of the applicant or his

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company.

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Learned counsel for the applicant has also submitted that the Director of M/s jai Durga and Drolia Coke has deposited an amount of Rs.70,25,716.40 with the Directorate of Enforcement in pursuance of order dated 15.10.2020, passed by Hon'ble High Court of Delhi in W.P. (C) No.6314 of 2020. Further, the said Director has also submitted letter to the opposite parties to accept the amount of Rs.77,17,664.14 in pursuance of judgment and order dated 29.03.2023, passed by High Court of Delhi in W.P. (C.) No.4021 of 2023, but till date no order has been passed on his application. A copy of the order dated 29.03.2023 is annexed as Annexure No.10 to the affidavit. It has also been brought to the notice of this court that though two different charge sheets pertaining to both the companies of the applicant were filed by the C.B.I. before the learned trial court, but while lodging the complaint against the applicant, both the charge sheets and F.I.Rs. were amalgamated/merged only to bring the alleged proceeds of crime beyond the limit of one crore rupees. Regarding the scheduled offence, suffice is to say that the applicant has already been granted anticipatory bail in that case by means of orders dated 04.04.2022 & 23.05.2022, passed by this Court in Criminal Misc. Anticipatory Bail Application U/s 438 Cr.P.C. No.11607 of 2021 and 11617 of 2021.

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The learned counsel for the respondent has next submitted that the C.B.I. has already submitted a charge sheet against the applicant in the scheduled offence and, therefore, the E.D. is not required to examine the allegations levelled by the C.B.I. against the applicant and the applicant cannot challenge the correctness of the allegations levelled in the charge sheet in these proceedings.

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Learned counsel for the applicant has submitted that in a case involving similar facts arising out of breach of fuel supply agreement, the High Court of Jharkhand at Ranchi has quashed the F.I.R. and the charge sheet submitted by the C.B.I. by means of judgment and an order dated 27.04.2023, passed in the case of M/s Hindustan Industries through its Proprietor Anil Kumar Kejriwal Vs. Union of India and another: Writ Petition (Cr.) No.304 of 2011.

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Keeping in view the fact of the case and without making any observations which may affect the outcome of the case, I am of the view that the aforesaid facts are sufficient for making out a case for granting anticipatory bail to the applicant.

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Accordingly, application for anticipatory bail is allowed.

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In the event of arrest/ appearance of applicant- Mohan Kumar before the learned Trial Court in the aforesaid case crime, he shall be released on anticipatory bail on his furnishing personal bond and two solvent sureties, each in the like amount, to the satisfaction of S.H.O./Court concerned on the following conditions and subject to any other conditions that may be fixed by the Trial Court:

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(i) that the applicants shall make themselves available for interrogation by a police officer as and when required;

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(ii) that the applicant shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to any police officer or tamper with the evidence;

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(iii) that the applicant shall not leave India without the previous permission of the court;

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(iv) that the applicant shall appear before the trial court on each date fixed, unless personal presence is exempted; and

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(v) that the applicant shall not pressurize/ intimidate the prosecution witness.

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[Subhash Vidyarthi,J.]

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Order Date :- 27.5.2024 kkv/

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Digitally signed by :- KRISHAN KUMAR High Court of Judicature at Allahabad, Lucknow Bench

Mohan Kumar v. Govt. of India Thru. Assistant Director Directorate of Enforcement

Case brief

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Mohan Kumar v. Govt. of India Thru. Assistant Director Directorate of Enforcement

Case brief

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