‘Only person in direct touch with Vijay Nair’: ED opposes Benoy Babu’s bail plea in excise policy case

“He says ‘I have nothing to do with the proceeds of crime, I’m a witness in the predicate offence and extending corporate guarantee to retailers is not an offence’, and he has also said PRI has nothing to do with South Group,” Hossain said, recounting Babu’s arguments.

Hossain referred to the definition of Section 3 of the PMLA to state that the “intention of the legislature was that irrespective of your role in scheduled offence you can be arrayed under PMLA”. Babu had argued that the predicate offence investigated by the CBI is the foundation for the ED’s case in which Babu was not an accused but a witness.

“Extension of corporate guarantee in a given case may not be an offence at all, but if it is done in connection with a process or activity relating to proceeds of crime, it falls foul of Section 3 PMLA,” Hossain said.

CBI chargesheet was filed on November 24, 2022 while the ED filed prosecution complaint on November 26, 2022, and a supplementary complaint was filed on January 6. Senior advocate Mukul Rohatgi, appearing for Babu, had previously argued that his client was not named in the CBI FIR or chargesheet.

“The allegation is that he played a key role in ensuring that the wholesale business of PRI goes to Indo Spirits which could be used as a vehicle for recouping the kickbacks by the South Group. Indo Spirits has three partners, Sameer Mahendru, and two others from South Group, Arun Pillai and Prem Rahul Manduri. Pillai and Manduri have been given 33% stake each for barely any consideration in a very lucrative wholesale business which would go on to control more than 30% liquor business in Delhi. That 33% shareholding in Indo Spirits was given only to enable recoupment of wholesale profits back to South Group. Proceeds of Crime to the tune of about Rs 32 crore has flown from the wholesale business of Indo Spirits to Arun Pillai who was representative of the South Group,” Hossain argued.

With respect to Babu’s “key role”, Hossain said, “…when the policy says that there should no cartelisation between manufacturer, wholesaler, and retailer, he (Babu) extends Rs 200 crore corporate guarantee to retailers with the condition that 35% of stock will be stocked with Pernod Ricard. Their fledgling losses were sought to be overcome by this strategy. He is responsible for sending thousands of fake emails to show that there is general public approval for the liquor policy…He was the only person who was directly in touch with Vijay Nair, who was the go between the politically exposed persons and the South Group.”

With respect to Section 3, Hossain relied on the SC judgment in Vijay Madanlal Chaudhary case to say that Section 3 has a “wide reach” and not just limited to projecting of tainted property as untainted but also any process or activity connected with proceeds of crime.

On the evidence, Hossain said, “This is a case where there have been large-scale destruction of evidence, not only in the form of deletion of WhatsApp chats, deletion of emails etc., but also in the form of destruction and complete removal of mobile phones that were being operated…which even the trial judge has taken note of.”

He argued that today, the “mobile itself is a computer” and has a huge memory and therefore is “capable of a lot of activity which was hitherto not possible”.

“When entire mobiles are destroyed in a scam of this nature where the conspiracy is spread across multiple states…then the challenge to the investigating agency is all the more, despite that we have been able to place cogent material evidence,” Hossain said.

The ED has stated that the draft policy was received by a man named Manoj Rai, but in Babu’s, it was found that the document had been deleted and this amounts to tampering with evidence.

“The policy document is not available in his WhatsApp chat with Rai, which shows it was deleted intentionally,” Hossain said.

Special Judge M K Nagpal on February 16 had dismissed the bail plea of Babu and four others holding that all the accused in this case can be “prosecuted in the scheduled offences (ED) case even if none of them happen to be a public servant as they all are alleged to have been a part of the said conspiracy”.