Orissa High Court on NBW and Bail in PMLA Proceedings: Analysis of Rajat Choudhury Vs Union of India (Enforcement Directorate)

1. Background and Procedural Context

The Orissa High Court in Rajat Choudhury Vs Union of India (Enforcement Directorate) dealt with an application under Section 482 Cr.P.C. challenging an order of the Special Court under the Prevention of Money Laundering Act, 2002 (PMLA). The impugned order dated 13.11.2023, passed in Crl. Misc. (PMLA) Case No.34 of 2016 by the Spl. Judge, CBI-I-cum-Addl. Dist. & Sessions Judge, Bhubaneswar, directed issuance of a non-bailable warrant (NBW) against the Petitioner.

The Petitioner, Rajat Choudhury, was one of the Power of Attorney Holders of M/s. Artha Tatwa Infra India Ltd. and was arrayed as accused No.11 in a PMLA complaint arising out of the alleged chit fund scam in Odisha. The complaint was instituted at the instance of the Assistant Director, Enforcement Directorate (ED), and after investigation, cognizance was taken under Section 3 read with Section 70(1) and (2) of the PMLA, punishable under Section 4 of the PMLA, 2002.

The Petitioner approached the High Court seeking to invoke its inherent powers under Section 482 Cr.P.C. to set aside the NBW, contending that the warrant was issued mechanically and at the first instance, contrary to settled legal principles governing issuance of non-bailable warrants.

2. Allegations Against the Petitioner

2.1 Role as Power of Attorney Holder and Property Transfer

As per the ED’s complaint, the Petitioner was a Power of Attorney Holder in respect of a land belonging to M/s. Artha Tatwa Infra India Ltd. situated at Plot No.582 of Khata No.272/132 in Hatasahi Mouza, Bhubaneswar. It was alleged that:

  • The Petitioner, along with other Power of Attorney Holders, transferred this land to M/s. Orisons Properties Pvt. Ltd.
  • The transfer was allegedly carried out without receipt of any consideration from the purchaser.
  • The transaction was stated to be part of laundering of proceeds of crime linked to the broader activities of the AT Group of Companies, allegedly controlled by accused Pradeep Kumar Sethy.

2.2 Flat Purchased in the Name of Petitioner’s Wife

Another key allegation related to a flat at Trishna Orchid Apartment, Bhubaneswar, recorded in the name of the Petitioner’s wife. The ED alleged:

  • The flat was purchased from one Chitta Ranjan Champatiray, the father-in-law of Srikrushna Padhi.
  • Srikrushna Padhi was asserted to be the accountant of the AT Group of Companies and a close associate of Pradeep Kumar Sethy.
  • The ED suspected that the flat had nexus with ill-gotten funds from the alleged chit fund activities and that the transaction was not supported by genuine consideration.

2.3 ED’s Broad Case Theory

The prosecution case under Section 4 PMLA was that the accused persons, including the Petitioner:

  • Acted in concert with M/s. Artha Tatwa Infra India Ltd. of accused Pradeep Kumar Sethy.
  • Mobilised money from the public by allegedly making false assurances and promises.
  • Utilised various property transactions, including the above, to launder the proceeds of crime generated by such activities.

3. Petitioner’s Defence and Reliance on Income-tax Proceedings

3.1 Position Regarding Trishna Orchid Flat

The Petitioner disputed the ED’s allegation that the flat in the name of his wife was purchased without real payment of consideration. He contended that:

  • His wife had actually paid cash consideration for acquisition of the immovable property.
  • The transaction and payments had already been scrutinised under the Income-tax Act, 1961.

The Petitioner relied on the order passed by the Additional CIT, Range-1, Bhubaneswar under Section 271E of the Income-tax Act, 1961, wherein:

  • It was recorded that the Petitioner’s wife had made payment of Rs.17,66,000/- towards purchase of an immovable property.
  • The authority held that there was no question of repayment in such transaction.
  • Consequently, there was no violation of Section 269T and the penalty proceedings under Section 271E were dropped.

On this basis, the Petitioner argued that the property transaction was a clean and transparent deal without any link to alleged “proceeds of crime” and that the ED’s suspicion stood neutralised by the tax authorities’ findings.

3.2 Position Regarding Hatasahi Land Transaction

With regard to the Hatasahi land (Plot No.582, Khata No.272/132), the Petitioner’s stand was:

  • No direct transaction took place between him and the AT Group of Companies.
  • The relevant dealings were between the AT Group and one Dillip Kumar Mohanty, Director of `M/s. Orisons Properties Pvt.