Facts of the Case

This is a Prevention of Money Laundering Act (PMLA) bail matter, not a GST case. The petitioner (arrayed as A.2 in a case information report registered by the Directorate of Enforcement, Hyderabad Zonal Office) sought regular bail in connection with alleged diversion of government funds relating to the Andhra Pradesh State Skill Development Corporation (APSSDC) — Siemens skill-training project.

As per the prosecution's case, APSSDC had entered into an agreement with Siemens (through its group entities, SISW and DTSPL) for a project costing over Rs. 3,281 crore across six clusters, of which the Government was to bear roughly 10%. Investigation revealed alleged diversion of government funds through a chain of shell companies — from DTSPL to Skillar Enterprises India Private Limited (SEPL), and onward to Allied Computers International Asia Limited (ACI) and other entities — on the pretext of supply of software/hardware/services that were never actually delivered, generating cash that was allegedly siphoned off.

During the investigation, documents were collected from APSSDC and a forensic auditor, including — as noted once in the order — a copy of a show cause notice issued by the office of the Director General of GST Intelligence (DGGI), Pune, along with a forensic audit report. This GST-related document was examined only as one piece of underlying financial evidence gathered for the PMLA investigation; the case itself does not involve any GST charge or interpretation.

Issues Involved

  1. Whether the petitioner satisfied the twin conditions for bail under Section 45 of the PMLA — namely, reasonable grounds to believe he was not guilty of the offence, and that he was unlikely to commit any offence while on bail.
  2. Whether continued incarceration was necessary given the length of investigation, absence of a charge sheet in the predicate offence, and the petitioner's cooperation with the investigating agencies.

Petitioner's Arguments

  • The Authorised Officer's 'reason to believe' under Section 19 of the PMLA relied on oral/hearsay material (statements under Section 50 of the PMLA) without adequate corroboration.
  • No charge sheet had been filed in the predicate offence (Crime No. 29 of 2021) even after more than 14 months of investigation, and the petitioner had already been granted bail in that predicate case.
  • The petitioner had cooperated fully with the investigating agencies, appearing whenever summoned, and no incriminating material was found during a search of his residential premises.
  • The twin conditions under Section 45 of the PMLA stood satisfied in his favour, relying on Vijay Madanlal Choudhary v. Union of India, P. Chidambaram v. Directorate of Enforcement, and Sanjay Raghunath Agarwal v. Directorate of Enforcement.

Respondent's Arguments

  • The Enforcement Directorate relied heavily on Section 45 of the PMLA, contending that its twin conditions impose an additional embargo on bail over and above the CrPC.
  • Investigation had revealed serious discrepancies, including diversion of APSSDC funds through shell companies with no genuine business activity, and fabricated invoices to project bogus transactions as genuine.
  • Given the pending investigation, the bail application should be dismissed.

Court Order / Findings

  • The Court noted that despite over 15 months of investigation by multiple agencies, no charge sheet had been filed in the predicate offence, and there was no material showing that any money had flowed directly into the petitioner's own account.
  • Relying on the Supreme Court's guidance in Vijay Madanlal Choudhary and the specific facts of Sanjay Raghunath Agarwal (where a similarly long-pending predicate offence without a charge sheet was treated as relevant to satisfaction of the second twin condition), the Court held that continued incarceration was not justified.
  • Bail was granted subject to conditions: executing a personal bond of Rs. 50,000/- with two sureties, cooperating with the investigation, attending before the investigating agency every Friday, and not leaving the country without the Court's permission (his passport having already been seized in the predicate case).

Important Clarification

This order decides a PMLA bail question — not any GST liability or interpretation. The single reference to a DGGI show cause notice reflects that the Enforcement Directorate had examined a GST-related document as part of building its broader money-laundering case; it does not mean the petitioner was charged with any GST offence, and no GST provision is analysed anywhere in the order.

Sections Involved

  • Section 45 of the Prevention of Money Laundering Act, 2002 (twin conditions for bail)
  • Section 19 of the Prevention of Money Laundering Act, 2002 (power to arrest)
  • Sections 166, 167, 418, 420, 465, 468, 471, 409, 201, 109 read with 120B of the Indian Penal Code, 1860
  • Section 13(2) read with 13(1)(c) and (d) of the Prevention of Corruption Act, 1988

Decision – In Favour of

Decided in favour of the petitioner — bail was granted under the PMLA's twin-condition test, without any GST-law issue being adjudicated.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Criminal Petition No. 2907 of 2023
Coram: Hon'ble Sri Justice K. Sreenivasa Reddy
Date of Order: 12.05.2023

Link to Download the Order

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