Supreme Court grants bail to lawyer, bureaucrat in Chhattisgarh coal scam case

The Supreme Court recently granted bail to two persons accused of being involved in a money laundering case linked to the alleged Chhattisgarh coal allocation scam [Laxmikant Tiwari v. Directorate of Enforcement].

The Court has allowed bail pleas filed by Laxmikant Tiwari and Shiv Shankar Naag by way of a common order dated October 4.

While granting bail, the Bench of Justices Abhay S Oka and Augustine George Masih also observed that no offence found in the schedule to the Prevention of Money Laundering Act, 2002 (PMLA) was alleged against the two accused when the Enforcement Directorate (ED) filed its 2022 complaint against them or when a chargesheet was filed in 2023.

A scheduled offence was only added at a later stage, the Court found.

"When the complaint under Section 44 of the PMLA Act was filed, the scheduled offence was not in existence. Even in the charge-sheet filed in the FIR which is stated to be a scheduled offence in the complaint, there was no allegation of commission of any scheduled offence. As late as on 19th July, 2024, now the charge-sheet has been filed in the State of Chhattisgah for the offence punishable under Section 384 (extortion) of the IPC," the order stated.

The Court also noted that the two accused had remained in jail for about two years. Continuing their incarceration would violate their rights to life and liberty, the Court concluded.

"Considering the long period of incarceration and considering the peculiar fact of these appeals, continuation of custody of the appellants will be violation of their right under Article 21 of the Constitution of India. Hence, the appellants are entitled to be enlarged on bail for the offence punishable under Section 4 of the PMLA Act," the Court's order said.

The Chhattisgarh coal levy scam involves allegations of extortion and illegal levies for the transport of coal in the State.

Laxmikant Tiwari was detained on October 13, 2022, after the ED registered an ECIR on September 29, 2022. The probe began after the Income Tax Department raided a hotel in Bengaluru on June 30, 2022. The raid allegedly unearthed evidence of illicit coal levies arranged by one Suryakant Tiwari.

The ED said that Laxmikant Tiwari, a lawyer and the uncle of Suryakant Tiwari according to reports, handled criminal profits totalling ₹26 crores, which were used to acquire immovable properties. He was also accused of keeping unlawful currency and helping in money laundering.

Shiv Shankar Naag, who was a Deputy Director in the Mining Department, was arrested on January 25, 2023, on allegations that he was part of the conspiracy. The ED said that Naag confirmed coal supply orders in exchange for bribes, supporting an extortion scheme.

The ED's 2022 complaint against the two accused had cited the offences under Sections 186, 204, 353, and 120-B of the Indian Penal Code, 1860.

The Chhattisgarh High Court had previously rejected bail to Tiwari and Naag. Aggrieved, they had approached the apex court for relief.

The top court noted that only Section 120-B constituted a scheduled offence under the PMLA. However it also pointed out that by a 2023 verdict (Pavana Dibbur v. Directorate of Enforcement), the Supreme Court had observed that the PMLA cannot be invoked merely by citing Section 120B (criminal conspiracy) as a standalone offence unless this offence is linked to a money laundering offence.

In this case, the Court noted that a scheduled offence (extortion under Section 384, IPC) was only added later. Notably, the charge under Section 120-B offence was also eventually dropped on account of want of evidence.

The Court concluded that at the time of filing the ED's complaint, and when a chargesheet was initially filed in 2023, no scheduled offence was cited against the two accused.

Given the accused-appellants' protracted confinement in jail, the Court proceeded to grant them bail.

Advocate Sriram Parakkat appeared for the accused. Advocate Zoheb Hossain represented ED.

[Read Order]