No Direct Evidence Needed for PMLA Attachment if Nexus with Proceeds of Crime is Prima Facie Established: Chhattisgarh High Court - 2025-07-24

Chhattisgarh High Court Upholds ED's Attachment of Properties in Coal Levy Case, Cites Prima Facie Nexus to Proceeds of Crime

Bilaspur, Chhattisgarh – The High Court of Chhattisgarh, in a significant ruling, has dismissed a batch of appeals challenging the attachment of properties by the Directorate of Enforcement (ED) in the high-profile coal levy extortion case. A Division Bench of Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru held that direct evidence is not essential to establish that a property constitutes "proceeds of crime" under the Prevention of Money Laundering Act, 2002 (PMLA), as long as a prima facie nexus is established through circumstantial evidence.

The court affirmed the orders of the PMLA Adjudicating Authority (AA) and the Appellate Tribunal, which had confirmed the ED's provisional attachment of numerous properties belonging to key accused Suryakant Tiwari, IAS officer Sameer Vishnoi, and their associates.

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Background of the Case

The appeals were filed by several individuals and companies, including Suryakant Tiwari, his family members, IAS officer Sameer Vishnoi, and companies like M/s Indermani Mineral India Pvt. Ltd. and M/s KJSL Coal and Power Private Limited. They challenged the confirmation of the Provisional Attachment Order (PAO) dated December 9, 2022.

The ED's investigation stemmed from allegations of a large-scale extortion syndicate operating in Chhattisgarh. The syndicate, allegedly masterminded by Suryakant Tiwari with the connivance of senior bureaucrats, was accused of illegally collecting a levy of ₹25 per tonne on coal transported in the state. The ED estimated that the total proceeds of crime (PoC) generated by this syndicate amounted to approximately ₹540 crore.

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Key Arguments from Both Sides

Appellants' Contentions

The appellants, represented by a team of senior advocates, mounted a multi-pronged challenge, arguing that:

* Absence of Predicate Offence: The PMLA proceedings were invalid because the original FIR registered in Karnataka, which formed the basis of the ECIR, eventually dropped the scheduled offence of extortion (Section 384 IPC) from the charge sheet.

* No "Reason to Believe": The ED lacked a credible basis to believe the attached properties were derived from criminal activities. They argued that many properties were purchased with legitimate, accounted funds through banking channels.

* Bona Fide Purchasers: Several corporate appellants claimed they were bona fide purchasers and, in fact, victims of the extortion racket, not perpetrators.

* Unreliable Evidence: The ED's case was built on weak evidence, such as uncorroborated diary entries and statements of co-accused recorded under Section 50 of the PMLA.

* Violation of Natural Justice: The appellants alleged procedural irregularities, including the denial of the right to cross-examine witnesses and the AA being improperly constituted.

Enforcement Directorate's Rebuttal

Dr. Saurabh Kumar Pande, representing the ED, countered these claims by asserting:

* Predicate Offence Exists: The extortion offence was not dropped but transferred to the Chhattisgarh Police, which subsequently registered a new FIR including multiple scheduled offences. This was upheld by the Supreme Court in Saumya Chaurasia v. Directorate of Enforcement .

* Organized Criminal Conspiracy: The case involved a well-oiled syndicate that used the official machinery for extortion. The money laundered was used to acquire benami properties, pay bribes, and fund elections.

* Burden of Proof on Accused: Under Section 24 of the PMLA, once the ED establishes a prima facie case, the burden shifts to the accused to prove that their assets are not proceeds of crime, which they failed to do.

* Sham Transactions: The ED argued that many property sales, especially after the income tax raids began, were sham transactions designed to alienate the tainted assets and project them as clean.

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Court's Analysis and Rationale

The High Court meticulously examined the provisions of the PMLA and the evidence on record before arriving at its decision. The bench made several key observations:

"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 PoC."

The court rejected the appellants' argument regarding the absence of a predicate offence, relying on the Supreme Court's precedent in the Saumya Chaurasia case. It noted that the offence under Section 384 IPC was never dropped but was referred to the appropriate jurisdiction.

On the issue of evidence, the court highlighted the evidentiary value of statements recorded under Section 50 of the PMLA, which are deemed judicial proceedings and are distinct from statements recorded under Section 161 of the CrPC. The court found that the ED had successfully corroborated diary entries with the timing of property transactions, establishing a clear link.

The judgment emphasized the preventive nature of attachment under the PMLA.

"The purpose of attachment under the PMLA is a preventive measure to ensure that the property is not alienated or disposed of during the course of investigation and trial. It is not a final determination of guilt but a step to preserve the property suspected to be involved in money laundering."

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Final Verdict

Finding no substantial question of law to be answered, the High Court concurred with the findings of the Adjudicating Authority and the Appellate Tribunal. The appeals were dismissed as being devoid of merit.

The court, however, granted the appellants the liberty to take recourse to Section 8(8) of the PMLA, which pertains to the restoration of property upon the conclusion of the trial. This decision reinforces the ED's powers to attach properties suspected to be linked to money laundering, even in the absence of direct, smoking-gun evidence, provided a strong circumstantial case is made out.