Stringent Bail Conditions Under PMLA Upheld: Chhattisgarh High Court Rejects Bail in Coal Levy Scam Case - 2025-04-09

Chhattisgarh High Court Denies Bail in Coal Levy Scam Case, Citing Stringent PMLA Conditions

Bilaspur, Chhattisgarh – April 8, 2025 – The Chhattisgarh High Court has rejected a bail application filed by Sandeep Kumar Nayak, an accused in the high-profile coal levy scam case investigated by the Directorate of Enforcement (ED). Justice Narendra Kumar Vyas, presiding over the matter, upheld the stringent bail conditions stipulated under Section 45 of the Prevention of Money Laundering Act (PMLA), 2002, emphasizing the gravity of economic offenses and the applicant's alleged involvement in the money laundering scheme.

Case Background: The Coal Levy Scam

The case originates from an FIR registered in Bengaluru concerning obstruction of Income Tax officials and destruction of evidence during a search operation related to alleged illegal extortion in coal transportation involving Suryakant Tiwari and his associates. Subsequently, the ED registered an Enforcement Case Information Report (ECIR) based on this predicate offense, investigating money laundering allegations.

Sandeep Kumar Nayak, an Assistant Mining Officer, was arrested on January 25, 2023, accused of facilitating the illegal levy collection. The prosecution alleges that Nayak, in collusion with Rahul Singh (an associate of Suryakant Tiwari), facilitated the clearance of coal delivery orders (DOs) only after illegal payments of Rs. 25 per ton were made. Whatsapp messages and statements from Rahul Singh were cited as evidence of this modus operandi, indicating Nayak's knowing assistance in the extortion syndicate and generation of proceeds of crime.

Arguments for Bail and Prosecution's Opposition

Advocate Manish Nigam, representing Sandeep Kumar Nayak, argued that the ECIR was an abuse of process, lacking a proper nexus to the initial FIR and that his client's name was not even mentioned in the original FIR. He contended non-compliance with Section 19 of PMLA regarding grounds of arrest and argued that no scheduled offense was made out against his client. Further, he raised the lack of sanction under Section 197 of CrPC (now Section 218 of Bhartiya Nayay Suraksha Sanhita) for prosecuting a public servant and cited precedents emphasizing strict construction of "Proceeds of Crime." He also pointed to parity with another accused granted bail and highlighted the prolonged incarceration of his client.

Dr. Saurabh Kumar Pande, Special Public Prosecutor for the Enforcement Directorate, strongly opposed the bail application. He emphasized the applicant’s role as an Assistant Mining Officer in facilitating the extortion, citing statements and Whatsapp messages as evidence. He argued that Nayak failed to meet the twin conditions of Section 45 of PMLA, stating it was "highly impossible" to believe the accused was not guilty of money laundering. He referenced judgments like Vijay Madanlal Chaudhary v. Union of India to underscore the stringent nature of PMLA bail conditions and the potential for influential accused in economic offenses to tamper with evidence. He highlighted the scale of the alleged money laundering, approximately Rs. 540 crores, and cited precedents against granting bail in serious economic offenses.

Court's Reasoning and Decision

Justice Vyas, after reviewing the ECIR and arguments, framed the central point for determination: whether the applicant fulfills the twin conditions of Section 45 of the PMLA for bail. The court noted that prima facie evidence of money laundering against Nayak had been collected by the ED, though its correctness is subject to trial.

Addressing the applicant's long incarceration argument, the court stated: "This cannot be considered and deserves to be rejected as the applicant being Assistant Mining Officer was very much responsible for affairs of the Government regarding transportation of mines and minerals and he has knowingly and willingly assisted the extortion syndicate... which prima facie establishes his involvement."

The court referred to Y. Vs. State of Rajasthan & another [(2022) 9 SCC 269] and Saumya Chourasiya Vs. Directorate of Enforcement to reiterate the principles for bail consideration, emphasizing prima facie involvement, nature and gravity of charges, and the twin conditions of Section 45 PMLA. It specifically quoted from Saumya Chourasiya highlighting the PMLA's object to combat money laundering and the stringent regulatory measures embedded in Section 45.

Justice Vyas explicitly stated that the applicant had failed to fulfill the twin conditions of Section 45 PMLA. Regarding the sanction argument, the court held that sanction under Section 218 BNSS is not required for acts done in violation of official duty, and prima facie, Nayak's actions fell outside the scope of public duty.

Bail Rejected

Ultimately, the Chhattisgarh High Court rejected Sandeep Kumar Nayak's bail application. The court concluded that considering the "factual and legal matrix, the role played by the applicant, prima facie and also considering the gravity of offence, I am not inclined to enlarge the applicant on bail."

The judgment underscores the strict application of Section 45 of the PMLA, especially in cases involving economic offenses and allegations of money laundering, even at the bail stage. The decision serves as a reminder of the challenges faced by accused individuals in securing bail under the stringent provisions of the PMLA.

Case Citation: MCRC No. 642 of 2025, Sandeep Kumar Nayak v. Directorate Of Enforcement

Bench: Hon'ble Shri Justice Narendra Kumar Vyas

Counsel for Applicant: Mr. Manish Nigam, Advocate

Counsel for Respondent: Dr. Saurabh Kumar Pande, Special Public Prosecutor

Date of Decision: April 8, 2025