New Delhi: Rejecting his contention that a non-bailable warrant (NBW) issued against him was executed with his arrest in the United Kingdom and subsequent discharge from the extradition plea of the Indian government in the country absolves him from legal proceedings in India, a Delhi court Saturday declared London-based arms dealer and businessman Sanjay Bhandari, a fugitive economic offender.
In a detailed judgment, District Judge Sanjeev Aggarwal stated that the failure of the extradition attempt wouldn’t render the accused, in this case, Bhandari, immune to legal proceedings and that it was merely one of the means to compel the accused to face trial. Similarly, the proceedings under the Fugitive Economic Offenders Act 2018 are another coercive measure to force individuals charged with economic crimes exceeding Rs 100 crore.
The court was deciding on the Enforcement Directorate’s application, which had been moved in December 2019 under sections 4, 10, and 12 of the Fugitive Economic Offenders Act. The government introduced the act to address those accused of high-value economic crimes, including tax evasion and bank fraud.
The proceedings under the act were launched based on the Income Tax Department’s prosecution complaint in December 2018 under section 51 of the Black Money Act. Simultaneously, the Enforcement Directorate also launched a probe under the Prevention of Money Laundering Act, 2002, in response to the findings of the Income Tax Department under the Black Money Act.
The agency submitted to the court that a Delhi court had also issued non-bailable warrants against him in 2019, and he was also declared a proclaimed offender in a case investigated by the Delhi Police Crime Branch at the same time.
Based on an investigation by the Enforcement Directorate and the Income Tax department, the Government of India made two extradition requests to the UK government in April 2020, which were ratified in June of the same year by the UK Home Secretary.
Then, in November 2022, a district judge referred the matter of Bhandari’s extradition to the Secretary of State, who ordered his extradition in January 2023, as per the terms of the 2003 extradition treaty between India and the United Kingdom. However, the UK High Court blocked his extradition on 28 February this year and subsequently also blocked India from appealing against the judgment before the Supreme Court.
Relying on the judicial proceedings in the UK, Bhandari’s counsel argued that he has the right to reside in the UK. Hence, he does not fall within the definition of Section 2(1)(f), as it defines the relevant accused as a person who refuses to return to India to face criminal prosecution.
“The said argument is without any substance, as the extradition failure will not make any difference, as the extradition of the accused was one of the means to bring the accused to India to face trial in the said offence u/S. 51 of the Black Money Act. Extradition attempt may have failed, but it will not make accused angel or immune from the prosecution for the violation of Indian laws,” Judge Aggarwal observed in the order.
“The FEO proceedings are another way of making one come back to India to face trial by coercing him to return by attachment, confiscation of the properties of such fugitive economic offender and proceeds of crime and by dis-entitling the such fugitive economic offender from putting forward or defending any civil claim. This is applicable to an individual who has committed schedule offence or offence(s) involving an amount of Rs 100 crore or more and who has absconded or refuses to come back to India to avoid criminal prosecution in India,” he further observed.
The court also dismissed Bhandari’s arguments that since he was arrested in 2021 based on non-bailable warrants against him, which initiated extradition proceedings, there are no live warrants against him making the FEO Act inapplicable against him.
“The said argument of the Ld. Counsel for the accused/respondent is without any substance, as it may be that the accused may have been arrested pursuant to the open ended NBW issued against him dated 31.10.2019 u/S. 51(1) of the Black Money Act, which formed the basis for launching extradition proceedings against him, but the same is still valid, as the said warrant was not issued for launching the extradition proceedings against the accused/respondent, but was issued for coercing the accused/respondent Sanjay Bhandari to face inquiry/trial in the said prosecution complaint filed u/S. 51(1) of the Black Money Act, filed before the Court of Ld. ACMM, Tis Hazari Courts, Delhi,” Judge Aggarwal noted.
Now, the Judge has asked the ED to pursue confiscation of the properties belonging to Bhandari as per the provisions of the FOE, Act 2018.
Bhandari becomes the 16th individual to be declared a fugitive economic offender, joining a list of businessmen such as Nirav Modi, Vijay Mallya, Nitin Sandesara, Chetan Sandesara, his wife Dipti and Hiteshkumar Narendrabhai Patel. Mallya was the first to be declared an FEO in January 2019. Sources in the agency said properties have been confiscated in seven cases. Now, the Judge has asked the ED to pursue the confiscation of properties belonging to Bhandari as per the provisions of the FOE Act, 2018.
Also read: UK court refuses India permission to appeal Sanjay Bhandari extradition discharge
Backdated documents, shell companies & London properties
The entire proceedings against Bhandari began in 2016, when the Income Tax Department conducted raids at Bhandari’s residence in New Delhi in April 2016.
During the raids, the department allegedly discovered incriminating documents revealing a host of foreign entities and properties beneficially owned by Bhandari.
Following this, the department also intercepted his chartered accountant at Delhi’s IGI Airport and carried out raids at advocates linked to Bhandari to uncover the financial depth of his empire.
In its prosecution complaint before the court, the I-T department has alleged that Bhandari was preparing to transfer the nature of ownership of firms in Dubai by backdating documents to evade taxes under the Black Money Act, 2015.
The department further alleged that Bhandari hatched a scheme under which he got himself appointed as the sole trustee of the UAE-based Alrahma Trust with effect from 2006 for two reasons—to predate the ownership before enactment of the Black Money Act in 2015, as well as to show ownership in capacity of the sole trustee and not as an individual.
Later, Bhandari transferred the sole trusteeship to his trusted aide and a UK national, Sumit Chadha, in March 2015.
The ED has provide the entire list of properties and companies beneficially owned by Bhandari through his aides or benami transactions, including two properties in London. One of them at Bryanston Square was sold in 2010, but Bhandari is alleged to have failed to disclose this in his income tax filing.
It is the same property that ED has alleged was renovated by businessman Robert Vadra, where Vadra also stayed before it was sold at an inflated price.
In its rejoinder, the ED has alleged that Bhandari’s undisclosed foreign income for the assessment year 2017-18 stood at Rs 655 crore, with tax chargeable on the amount at a 30 per cent rate, amounting to Rs 196 crore.
In its counter, Bhandari alleged that the valuation of such undisclosed foreign income has varied in different submissions, ranging from an income of Rs 220.91 crore and a fine of Rs 66 crore in February 2020 to an income of approximately Rs 655 crore in the following month, with a fine of approximately Rs 196 crore. He further alleged that the valuation once again changed to approximately Rs 487 crore, plus tax of approximately Rs 146 crore in July of the same year, in an ED rejoinder, which was further changed to approximately Rs 191 crore income and approximately Rs 57.3 crore as tax during the course of the hearing
“A bare perusal of the varying valuation given in different proceedings in itself shows the fallacy in the ED’s case. As stated earlier, the requirement of the Scheduled Offence being of Rs 100 crore or more is a mandatory requirement which has to be satisfied at the threshold even for initiating the proceedings against the accused. As evident from the varying figures stated above, the ED, even today, is not certain of the Scheduled Offence being of Rs 100 crore or more, and in the absence of the same, the present case ought to be dismissed on this ground alone,” Bhandari’s counsels argued.
While the judge noted the fluctuations in the undisclosed income of Bhandari as submitted by the agencies at different times, he upheld the opinion of the ED at the time of filing application that there was enough material available to form the basis that the total value of the offence exceeded Rs 100 crore. Additionally, he documented that the undisclosed foreign income finally stood at approximately Rs 655 crore, and tax of approximately Rs 196 crore, in the final assessment order on 23 March 2020.
“No doubt these figures should not have been changed during the present proceedings, as it shows the tentative nature of figure in the mind of income tax authorities qua the total value of the schedule offence being more than Rs 100 crore, which kept on twisting and turning in a constant state of flux. However, this fact cannot be glossed over that at the time of filing the present application u/S. 4 r/w Section 10 & 12 of the Fugitive Offender(s) Act there was sufficient material available with the Deputy Director concerned which formed the basis for him to believe prima facie that the accused was a fugitive economic offender and the total value of the schedule offence was Rs 100 crore or more i.e. Section 51 of the Black Money Act, but this tentative figure of Rs 100 crore, though kept on changing, but finally was put to rest when the final assessment of the accused was done u/S. 10(4) of the Black Money Act on 23.03.2020, whereby his total undisclosed foreign income and assets were assessed to be Rs 655 crore approximately and tax as per Section 3 of the Black Money Act was assessed to be Rs 196 crores” Judge Aggarwal observed.
(Edited by Viny Mishra)
Also read: In last bid to halt extradition, Tahawwur Rana cites UK ruling in arms dealer Sanjay Bhandari case
There are a few Indian economic offenders and several subversives living the high life in UK, thumbing their noses at India. Courtesy British judges who it appears hold a view that their understanding of law and justice is well above that of Indian judges and courts.
The latest fad amongst such offenders is to claim threat of torture or custodial death in an Indian prison and voila, off to the Savoy every Sunday!
We have a FTA. on the cards. The resolution of such impasse should be included in the negotiations. If such people are not not extradited, at least the financial loss suffered by India should be extracted from UK within the FTA.
In today’s world financial loss makes everyone reasonable.