Supreme Court criticizes Enforcement Directorate's prolonged delay in filing final report in money laundering case

New Delhi, April 20, 2023: The Supreme Court of India criticizes Enforcement Directorate's prolonged delay in filing final report in money laundering case and has allowed the appeal filed by Sanjay Raghunath Agarwal, directing his release on bail in ECIR No.HYZO/26/2022 dated 05.05.2022, subject to such terms and conditions as may be imposed by the Metropolitan Sessions Judge-cum-Special Court under PMLA, Nampally, Hyderabad. The bench comprising of Justices V. Ramasubramanian and Pankaj Mithal, while hearing Criminal Appeal No.1198 of 2023 arising out of SLP (Crl.) No.1655 of 2023, observed that the continued incarceration of the appellant, who is a Chartered Accountant by profession, since September 26, 2022, may not be justified.

The Enforcement Directorate had filed an information report in ECIR No.HYZO/26/2022 dated 05.05.2022, naming six individuals and nine entities, including the appellant, as persons suspected of committing the offence of money-laundering under Section 3 of the Prevention of Money-laundering Act, 2002. Pursuant to the report, the appellant was arrested by the Enforcement Directorate on September 26, 2022, and was remanded to judicial custody by the Metropolitan Sessions Judge, Hyderabad, on September 27, 2022. However, no charge-sheet has been filed against him in the predicate offence for the past more than nine years.

The bench took note of the specific role attributed to the appellant in the prosecution complaint lodged by the Enforcement Directorate, which accused him of creating the entire infrastructure for Farmax and Arun Panchariya to bring about the fraudulent GDR issue and of providing formats for Board Resolutions and transferring funds from the account of Farmax with EURAM Bank to the Farmax subsidiary, namely, M/s. Farmax International FZE in UAE. However, the bench observed that the appellant is a Chartered Accountant by profession, and there is nothing in the prosecution complaint to show that he is in possession of "the proceeds of crime."

The bench also took note of the fact that the registration of the ECIR and the lodging of the prosecution complaint in the year 2022 were a sequel to the registration of the FIR for the predicate offence way back in the year 2013, and no final report has been filed in the FIR for the predicate offence for the past nine years. It observed that the continued incarceration of the appellant may not be justified and directed his release on bail subject to such terms and conditions as may be imposed by the Metropolitan Sessions Judge-cum-Special Court under PMLA, Nampally, Hyderabad. The conditions to be imposed by the Special Court shall include the surrender of the appellant's passport and his regular appearance before the Special Court whenever the prosecution complaint filed by the Enforcement Directorate is posted.

SANJAY RAGHUNATH AGARWAL    VS THE DIRECTORATE OF ENFORCEMENT