Shiva Kumar Deora Alias Shiva Ratan Deora vs. The Union Of INDIA Through Directorate Of Enforcement

Held

The Court held that the petitioner had miserably failed to satisfy the Court that there were reasonable grounds for believing he was not guilty of the alleged offences. The Court found sufficient material collected by the Directorate of Enforcement to show that the petitioner is prima facie guilty of the alleged offences. The Court noted the grave and serious nature of the allegations, which strike at the foundation of the country's economic and financial system, involving fraudulent transactions running into hundreds of crores of rupees through a complex layering process. The petitioner's activities were found to be indispensable to the layering and integration stages of money laundering, involving multiple shell companies under his de facto control. The magnitude of the fraud, its organized nature, and the systematic siphoning of funds were considered to strike at the core of the country's economic and financial fabric. The Court also took into account that the bail applications of co-accused Amit Gupta and Amit Agarwal @ Vicky Bhalotia had been rejected by the same Court and the Apex Court. Granting bail to the petitioner was deemed likely to send a wrong signal to society and embolden economic offenders, thereby undermining public confidence in the justice delivery system. The Court explicitly stated that any observations made were prima facie for the consideration of the bail matter only and would not be construed as an expression on the merits of the case, directing the trial court to proceed uninfluenced by these observations.

Facts

The petitioner, Shiva Kumar Deora, sought regular bail in connection with an Enforcement Case Information Report (ECIR) for offences under the Prevention of Money Laundering Act, 2002 (PML Act). The ECIR was based on three complaint cases filed before the Court of Economic Offences, Jamshedpur, for offences under Section 132 of the CGST Act, 2017, read with other sections of the IGST Act and the Indian Penal Code. The Directorate of Enforcement initiated the PML Act investigation upon observing that Sections 420, 467, and 471 of the Indian Penal Code are scheduled offences under the PML Act. The allegations involve a syndicate operating across multiple states, creating and managing fake companies to pass on ineligible Input Tax Credit (ITC) by issuing fake GST bills without delivering goods or services. The petitioner is alleged to be the mastermind behind this fraud, involving the creation of 135 shell companies, leading to an approximate loss of Rs. 750 crores to the government exchequer. The petitioner was arrested on May 8, 2025, and his subsequent bail application before the Chief Judicial Magistrate, Calcutta, was rejected. He was produced before the court, and transit remand was granted.

Key Issues

1. Whether the petitioner has made out a prima facie case for grant of regular bail under Section 439 of the Code of Criminal Procedure, 1973, considering the gravity of the alleged economic offences under the Prevention of Money Laundering Act, 2002, and the Prevention of Money Laundering Act, 2002, read with Section 132 of the CGST Act, 2017? Petitioner's Arguments: The petitioner contended that he had made out a case for bail, implying that the grounds for his continued detention were not sufficiently established or that there were reasonable grounds to believe he was not guilty. (Specific arguments are not detailed in the provided text, but the prayer for bail indicates this stance). Opposite Party (Directorate of Enforcement) Arguments: The Directorate of Enforcement argued against granting bail, highlighting the grave nature of the economic offences, the petitioner's alleged role as the mastermind, the large amount of fake ITC involved (approximately Rs. 750 crores), and the systematic modus operandi of creating shell companies. They presented materials collected during the investigation to demonstrate the petitioner's prima facie guilt. They also referred to the rejection of bail for co-accused, Amit Gupta and Amit Agarwal @ Vicky Bhalotia, by the same court and the Apex Court's refusal to interfere.