Chhattisgarh High Court Denies Bail to Assistant Mining Officer in Coal Levy Scam, Cites PMLA Twin Conditions

BILASPUR: The High Court of Chhattisgarh, presided over by Hon'ble Shri Justice Narendra KumarVyas , has rejected the bail application of Sandeep Kumar Nayak , an Assistant Mining Officer implicated in the alleged multi-crore coal levy money laundering scam. The Court found that the applicant failed to satisfy the stringent twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA) and ruled that prosecution sanction under the Bhartiya Nayay Suraksha Sanhita, 2023 (BNSS) was not required for the alleged acts.

Case Background

The Directorate of Enforcement (ED) arrested Sandeep Kumar Nayak on January 25, 2023, in connection with ECIR/RPZO/09/2022, alleging offences under Sections 3 and 4 of the PMLA. The ED's case stems from an investigation into an alleged extortion syndicate, purportedly led by Suryakant Tiwari , that collected an unauthorized levy of Rs. 25 per ton on coal transportation in Chhattisgarh.

The ED alleges that Nayak, during his posting as Assistant Mining Officer in Surajpur (2019-2022), knowingly assisted this syndicate. The prosecution claims Nayak coordinated with Suryakant Tiwari 's employee, Rahul Singh , delaying the issuance of No Objection Certificates (NOCs) for coal Delivery Orders (DOs) until Singh confirmed receipt of the illegal Rs. 25/ton levy from transporters. The ED estimates the proceeds of crime generated through this alleged scam exceed Rs. 500 crores.

Nayak first sought bail before the Special PMLA Court in Raipur, which was dismissed on July 14, 2023. He then approached the High Court under Section 483 of the BNSS, 2023.

Arguments Presented

Applicant's Counsel (Mr. Manish Nigam ):

Argued the ECIR was based on false allegations with no nexus to the predicate FIR (FIR No. 129/2022, Bengaluru), which didn't name Nayak.

Contended that mandatory grounds for arrest under PMLA Section 19 were not supplied.

Stated that the ED failed to show how Nayak generated "proceeds of crime" or projected them as untainted, essential elements under PMLA Section 3.

Emphasized that Nayak is a public servant, and prosecution required sanction under Section 197 CrPC (now Section 218 BNSS), which was not obtained, citing Directorate of Enforcement Vs. Bibhu Prasad Acharya .

Highlighted the long incarceration period (since Jan 2023) and sought parity with a co-accused granted bail, referencing Supreme Court judgments like Manish Sisodia Vs. Directorate of Enforcement .

Respondent's Counsel (Dr. Saurabh Kumar Pande , Special Public Prosecutor for ED):

Reiterated Nayak's alleged role in facilitating the extortion by coordinating with Rahul Singh based on statements recorded under PMLA Section 50.

Asserted that Nayak knowingly assisted in the predicate crime (extortion) and the generation of proceeds of crime.

Argued that Nayak failed to meet the twin conditions under PMLA Section 45: (i) reasonable grounds to believe he is not guilty, and (ii) unlikely to commit any offence while on bail, citing Vijay Madanlal Chaudhary .

Stressed the gravity of economic offences (approx. Rs. 540 crore involved) and the potential for influencing witnesses, citing Pankaj Grover and several Supreme Court judgments ( Nimmagadda Prasad , Saumya Chourasia , Satyendar Kumar Jain etc.).

Court's Analysis and Decision

Justice Vyas centered the decision on whether the applicant fulfilled the twin conditions of PMLA Section 45.

Prima Facie Case: The Court observed that the prosecution complaint and ECIR presented prima facie evidence, collected by the ED, indicating Nayak's involvement in money laundering, although its correctness requires trial adjudication. The Court noted Nayak's alleged role: "Thus, the applicant has knowingly and willingly assisted the extortion syndicate in committing the predicate crime of extortion and also in generation of proceeds of crime." [Para 4, 10, 20]

Twin Conditions (Section 45 PMLA): The Court explicitly stated, "[T]he applicant is unable to fulfill the twin conditions of Section 45 of the PMLA, 2002." [Para 20, 22]. It relied heavily on Supreme Court precedents like Vijay Madanlal Chaudhary , Saumya Chourasiya , Satyendar Kumar Jain , and Directorate of Enforcement Vs. Aditya Tripathi , which underscore the rigor of Section 45, especially in serious economic offences, and mandate the court's satisfaction on both conditions before granting bail.

Long Incarceration: The Court rejected the argument for bail based on the period of incarceration (approx. 2 years), citing the applicant's alleged role as a government officer assisting the syndicate and the gravity of the offence. It referred to Satyendar Kumar Jain , where the Supreme Court denied bail despite prolonged custody in a PMLA case, upholding the primacy of Section 45 conditions. [Para 16, 18]

Prosecution Sanction (BNSS S. 218 / CrPC S. 197): The Court dismissed the argument regarding the lack of prosecution sanction. It held that the alleged acts of facilitating extortion were prima facie outside the scope of Nayak's official duties. "It is well settled position of law that for act done in violation of the official duty, no sanction is required. In the present case, prima facie, the applicant is involved in crime in question which is not relates to public duty, therefore, sanction to prosecute under Section 218 BNSS is not required." [Para 23]

Final Order: Finding that the applicant failed to meet the PMLA Section 45 requirements and rejecting the plea regarding prosecution sanction, the High Court dismissed the bail application. The Court clarified that its observations are prima facie for the purpose of the bail application and will not influence the trial court's independent assessment of evidence.