The Chhattisgarh High Court has held that in a money laundering case, as the modus operandi often involves circuitous and opaque financial transactions which makes direct evidence inherently difficult to obtain, the absence of verifiable legitimate income can lead the Court to hold that there exists a nexus between the property sought to be attached and the proceeds of crime.
The bench of Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru has observed that it is not essential for the enforcement authority to establish by direct evidence that the property in question is proceeds of crime. In a money laundering case, the modus operandi often involves circuitous and opaque financial transactions, making direct evidence inherently difficult to obtain. Based on the material produced, including financial analysis, property acquisition timelines, and the absence of verifiable legitimate income, this Court is satisfied that there exists a prima facie nexus between the property and the proceeds of crime.
The Coal Washeries were acquired by MMCBPL from Indus Udyog and Satya Power for a sum of Rs.96,00,00,000/- out of which Rs.34,00,00,000/- was the registered value and rest of the amount was paid in cash by Suryakant Tiwari to Indus Udyog and Satya Power. After the IT raids, Sunil Kumar Agrawal made sham paper transaction to show that he was the owner of the Coal Washeries and registered the same in the name of the Appellant. Sunil Kumar Agrawal, promoter of the Appellant, purchased the Coal Washeries from MMCBPL for a consideration amount of Rs.34,00,00,000 to conceal PoC. Sunil Kumar Agrawal is acting as Benami of Suryakant Tiwari and has assisted in money laundering. All the properties were purchased in the year 2020 and appellant did not bring cogent evidence to prove source to acquire all the properties.
FIR was registered by the Kadugodi Police station Whitefield, Bengaluru, Karnataka, for the offences under Section 186, 204, 353 and 120B of the Indian Penal Code (for short, the IPC). Suryakant Tiwari, a resident of Raipur, Chhattisgarh, was alleged to be the main accused. The offence under Section 384 IPC was thereupon added by the Karnataka State Police on 03.09.2022.
The Central Board of Direct Taxes (CBDT) issued an Office Memorandum titled as “sharing of information with ED in the case of M/s Jai Ambey Group of Raipur (Suryakant Tiwari Group)” based on the report of DGIT, Investigation, Bhopal.
As per the said OM, Suryakant Tiwari in connivance with the Government officials of the State of Chhattisgarh carried out the offences of large scale illegal extortion punishable under Section 384 read with 120B of the IPC. The CBDT disclosed the need of ED to investigate the matter for contravention of Section 3 of the PMLA. According to the FIR and the documents received by the Income Tax Department, a search and seizure operation was conducted on the Chaurasia, Smt. Shanti Devi Chaurasia, Anurag Chaurasia, Sourabh Modi and Anil Agrawal. A supplementary complaint was also filed by the ED before the learned trial Court arraigning some of the appellants as accused person.
After passing of the confirmation order by the AA, the Karnataka Police filed its charge sheet under Section 173 of the Cr.P.C. before the Chief Judicial Magistrate, Bengaluru, Rural in respect of the predicate FIR which forms the substratum of the ECIR and consequent proceedings under the PMLA. However, Section 384 IPC which was the only scheduled offence in the predicate FIR was not included in the charge sheet.
Based on the charge sheet submitted, the learned Chief Judicial Magistrate, took cognizance of the offences under Sections 204 and 353 of IPC on 16.06.2023. The ED had also sent possession notice under Section 8(4) of the PMLA as well as eviction notice under Rule 5(2) of the Prevention of Money Laundering (Taking Possession of Attached Properties Confirmed by the Adjudicating Authority) Rules, 2013 for some of the properties attached by the AA in the subject OC.
Aggrieved by the Confirmation Order and Possession Notice issued on the strength of the Confirmation Order, the appellants filed an appeal before the learned Appellate Tribunal under Section 26 of the PMLA which were dismissed vide final order which is sought to be challenged herein this batch of appeals.
The appellant contended that the foundational facts for presumption under Section 24 of the PMLA has not been established. The Appellate Tribunal overlooked the fact that the PAO had been confirmed by the Confirming Order solely based on the presumption under Section 24 of the PMLA has not been rebutted. However, the presumption under Section 24 can be pressed into service only when the following foundational aspects are established namely, (i) the criminal activity relating to a scheduled offence has been committed, (ii) the property in question has been derived or obtained, directly or indirectly, by any person as a result of that criminal activity and; (iii) the person concerned is, directly or indirectly, involved in any process or activity connected with the said property being PoC.
On establishing the fact that there existed PoC and the person concerned was involved in any process or activity connected therewith, itself, constitutes offence of money laundering. None of the three foundational facts have been established by the ED. Neither the appellate order nor the Confirmation Order record any reasons on the aforesaid aspects and the PAO stood confirmed by the AA purely on the strength of the presumption under Section 24 of the PMLA.
The court held that there exists a reasonable belief, duly recorded and supported by material evidence, that the attached properties are involved in money laundering and further, the appellants have failed to rebut the statutory presumption under Section 24 of the PMLA.
Case Details
Case Title: Mr. Sourabh Versus Directorate Of Enforcement
Case No.: MA No. 34 of 2025
Date: 23/07/2025
Counsel For Petitioner: Harshwardhan Parganiha, Advocate
Counsel For Respondent: Dr. Saurabh Kumar Pande
