[Gold Smuggling case] Sivasankar has influence, wherewithal, power, cannot be allowed bail: ASG SV Raju to Kerala High Court

The bureaucrat had moved the High Court for bail following his arrest by the ED, which is presently investigating the smuggling of gold through diplomatic channels.
[Gold Smuggling case] Sivasankar has influence, wherewithal, power, cannot be allowed bail: ASG SV Raju to Kerala High Court
M Sivakumar, Kerala High Court

The Kerala High Court today heard submissions on behalf on the Directorate of Enforcement (ED) opposing former Kerala Principal Secretary M Sivasankar's bail application (M. Sivasankar v. Union of India).

The bureaucrat had moved the High Court for bail following his arrest by the ED, which is presently investigating the smuggling of gold through diplomatic channels. The ED is also investigating Sivasankar for allegedly receiving 'kickbacks' from Unitac and Sane Ventures for the LIFE Mission.

A Bench of Justice Ashok Menon today heard the ED's submissions on the bail plea.

Additional Solicitor General SV Raju vehemently opposed a grant of bail to Sivasankar, stating that the bureaucrat was powerful and could influence witnesses. Any grant of bail would hamper the progress of the investigation, he submitted.

"This is not a simple case, a high dignitary who is in a position to influence witnesses, in a position to tamper with witnesses, he has the power and wherewithal to influence witnesses, he has not cooperated with the investigation... therefore my lord should not exercise discretion at this stage of investigation, or our investigation will be hampered...", the ASG argued.

Countering Senior Advocate Jaideep Gupta's averments that the ED had not specified a predicate offence to proceed with investigation under the Prevention of Money-Laundering Act, 2002 (PMLA), ASG Raju submitted that money-laundering, under the legislation, was an independent offence.

As and when new material was unearthed, fresh complaints would be filed, he averred.

The ASG also addressed the specific contention that the twin conditions of Section 45 of the PMLA were no more good law, in light of the Supreme Court ruling in Nikesh Tarachand Shah v. Union of India. In this regard, the ASG relied on a 2019 amendment to the PMLA.

Section 45 of the PMLA pertains to allowing bail. Section 45(1) bars the grant of bail on allegations of offences under the PMLA unless:

  1. The Prosecution accedes to the request, or

  2. The Court finds reasonable grounds to believe the person's innocence and he is unlikely to commit an offence when enlarged on bail.

Before its amendment in 2019, only offences under Schedule I to the legislation were subject to Section 45. The conditions qualified how bail was to be granted for a PMLA Schedule I offence. The Amendment makes Section 45 applicable to all offences under the PMLA.

Sivasankar's Counsel Senior Advocate Jaideep Gupta had contended that the twin two conditions were no more good law in light of the Supreme Court's ruling that struck it down, Nikesh Shah v. Union of India.

ASG Raju, on the other hand, argued that the Supreme Court's observations in the case were made good by the 2019 amendment to the PMLA, which obliterated the illegality in the legal provision and revived the twin conditions.

On facts, the ASG asserted that Sivasankar's counsel was involved and had knowledge of both the smuggling of gold and the purported kickbacks in the LIFE Mission projects.

He adverted to a locker opened jointly by Sivasankar and Swapna Suresh (an accused in the gold smuggling case) as well as another locker held by Suresh, supposedly opened with the help of Sivasankar's auditor.

None of these lockers were opened without his knowledge, and the fact that he had requested the details of the amounts in the locker showed that he was interested in the amounts therein, the ASG averred.

Swapna Suresh was not a person of means and, as such, she could not have possessed all that money, the ASG additionally stated.

Referring to some statements Suresh made while in custody, the senior lawyer added that she had admitted to Sivasankar's knowledge of the gold smuggling operation and also contacted customs officials on her behalf.

However, there was no material yet to substantiate this as it was still being investigated, he admitted in Court.

Senior Advocate Jaideep Gupta made brief rejoinder submissions where he stated that a specific predicate offence would have to be specified out of which the proceeds of the alleged crime flowed.

In this case, he submitted, initially, gold smuggling was alleged, later kickbacks for crimes that could be Prevention of Corruption Act offences were alleged, he continued.

"There has to be an accusation that x is a predicate offence, these are the proceeds of crime, and so-and-so dealt with it: Gupta You cannot say that someone could have committed a predicate offence for which you want to launch investigation!...," Senior Advocate Gupta stated.

After hearing the submissions, Justice Menon closed hearings in the matter. The date on which the bail order will be pronounced has not been specified.

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