Jharkhand High Court
Amit Agarwal @ Vicky Bhalotia vs Directorate Of Enforcement on 8 October, 2025
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
2025:JHHC:31170
IN THE HIGH COURT OF JHARKHAND AT RANCHI
B.A. No.6030 of 2025
-----
Amit Agarwal @ Vicky Bhalotia, S/o R.L. Agarwal, aged
about 40 years, R/o Ram Tekri Road, PO & PS Jugsalai,
Ward No.11, Jamshedpur, District East Singhbhum,
Jharkhand .... .... Petitioner
Versus
Directorate of Enforcement, through its Assistant Director,
Having it Zonal office, Plot No.1502/B, Airport Road, PO &
PS Airport Road, District-Ranchi, Pin-834002, Jharkhand
...... Opp. Party
-------
CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
-------
For the Petitioner : Mr. Jatin Sehgal, Advocate
Mr. Raymon Singh, Advocate
Mr. Shailesh Poddar, Advocate
Mr. Yash Badkur, Advocate
For Opp. Party-E.D. : Mr. Amit Kumar Das, Advocate
: Mr. Saurav Kumar, Advocate
Mr. Varun Girdhar, Advocate
------
C.A.V. on 17.09.2025 Pronounced on 08/10/2025
Prayer
1. The instant application has been filed under
Sections 483 and 484 of the B.N.S.S., 2023 praying for
grant of regular bail in connection with ECIR Case No.05 of
2025 under Section 3 punishable under Section 4 of P.M.L
Act, arising out of ECIR/RNZO/18/2024 dated 23.09.2024
alleging commission of offence of money laundering and
now pending in the Court of learned Special Judge, CBI-
cum-Special Judge under PMLA, Ranchi.
BBl
2025:JHHC:31170
Prosecution case/Facts
2. The brief facts of the case as per the prosecution is
that the Directorate General of GST Intelligence (in short
DGGI), Jamshedpur filed three complaint cases i.e.
Complaint Case No. 678/2024 dt. 29.04.2024 against
Shiva Kumar Deora, Complaint Case No. 1280/2024 dt.
04.06.2024 against Sumit Gupta and Complaint Case No.
1281/2024 dt. 04.06.2024 against Amit Gupta u/s 132 of
the GST Act r/w section 20 of the Integrated GST Act, 2017
r/w section 34, 120A, 193, 195A, 201, 203, 204, 406, 409,
420, 465, 467, 468, 471 of IPC in the court of Economic
Office, Jamshedpur. Since u/s 420, 467 and 471 of the
IPC, above stated complaints filed by the DGGI,
Jamshedpur are scheduled offence and as per paragraph 1
Part A of the schedule provided under PMLA 2002, the
ECIR No. RNZO/18/2004 was recorded on 23.09.2024 for
conducting an investigation under PMLA, 2002.
3. As per aforesaid three complaint cases, it is revealed
that a syndicate is operational in Jharkhand, West Bengal,
Delhi and other States of the Country, Syndicate is
indulged in creation, operation and management of fake
companies / firms for passing on ineligible ITC (Input Tax
Credit) by issuing fake GST bills, without actually delivering
the related goods and services and the persons namely
Shiva Kumar Deora, Sumit Kumar Gupta and Amit Kumar
BBl
2025:JHHC:31170
Gupta are a part of the said syndicate who are knowingly a
party with each other and or directly involved in illegal
activities of creation of fake companies / firms in the name
of various dummy directors/ proprietors in order to avail
and pass on ITC to several end beneficiaries in lieu of
money, which are proceeds of crime. Further, it has been
stated in the complaints that several bogus GST invoices
have been generated in Delhi and have traveled to
Jharkhand via West Bengal in three to four layers.
4. A portion of these bogus ITCs have also been
transferred to other states such a Tamil Nadu, Telangana,
Andhra Pradesh, Maharashtra and Odisha and bogus ITC
claims have also been taken on the basis of the said fake
invoices.
5. As per aforesaid complaint cases Shiva Kumar
Deora is the mastermind behind the said fraud committed
of availing ITC on the strength of bogus invoices, by way of
creation of multiple companies/firms in the name of
innocent persons. They hired innocent and needy persons
in the name of job at the numeration of Rs. 10,000/- to
15,000/- per month and they were not required attend the
office daily. They were asked to provide OTP and PIN,
whenever required by them. Subsequently, fake firms and
companies were floated in the name of those innocent
BBl
2025:JHHC:31170
needy persons after using their identity, documents,
without their knowledge or consent.
6. Further, it is also revealed that Sumit Kumar
Gupta, the accomplice of Shiva Kumar Deora worked as an
office staff member on his instructions for creating DSCs,
rent agreements for various firms and companies for which,
he was initially paid a monthly salary of Rs. 30,000/-.
Shiva Kumar Deora and his accomplices namely Amit
Kumar Gupta and Sumit Kumar Gupta are beneficial
owners of total 135 shell companies/firms which are floated
in names of various dummy directors and by these firms
they availing fake ITC to the tune of Rs. 750 crores (Approx)
and passed them to several end beneficiaries thereby
causing significant loss to the government exchequer.
7. From the analysis of aforesaid complaints as filed
by DGGI, Jamshedpur, it is revealed that an FIR was
registered against Tutui Debnath, Sumi Shaw and Amit
Agarwal @ Vicky Bhalotia (applicant/petitioner herein).
8. Amit Agarwal @ Vicky Bhalotia is also one of the
accomplices of main mastermind Shiva Kumar Deora who
also works on similar modus in availing fake ITC on
strength of bogus invoices.
9. In this regard FIR NO. 98/2022 u/s 420, 406, 120B
of the IPC registered at Bowbazar Police Station, Kolkata
against Amit Agarwal @ Vicky Bhalotia in relation to the
BBl
2025:JHHC:31170
matter pertaining to availing fake ITC to the tune of Rs.
5,05,91,296/-.
10. Amit Agarwal is one of the directors of Greentech
Steel Private Limited which are indulged in claiming
ineligible ITC on strength of bogus invoices without actually
delivering the goods and services. Shiva Kumar Deora and
Amit Agarwal @ Vicky Bhalotia are also common directors /
proprietors of various firms. From the scrutiny of the bank
accounts maintained in the name of TE Udhyog Private
Ltd., it is revealed that Rs. 76,98,500/- have been debited
to Amit Gupta on various occasions. It is further revealed
that Amit Gupta is one of the former directors in the said
company namely TE Udhyog Pvt. Ltd. Further, several
transactions have been identified between the entities
beneficially owned by Shiva Kumar Deora and Amit Gupta
with the said Amit Agarwal @ Vicky Bhalotia through his
ICICI Bank Account.
11. Thus, it is evident that there is a nexus between
Shiva Kumar Deora and Amit Gupta with Amit Agarwal
alias Vicky Bhalotia in illegal claiming of fake ITCs through
fake firms/companies. Form scrutiny of the HDFC Bank
Account no. 50100055793602 maintained in the name of
petitioner Amit Agarwal @ Vicky Bhalotia, it is revealed that
a huge amount of Rs. 16,64,74,760/- has been credited
during the period from 28.10.2016 to 02.02.2025, out of
BBl
2025:JHHC:31170
which Rs. 3,41,60,151/- have been credited from the bank
account of Greentech Steel Enterprises during the period
01.10.2020 to 17.12.2024 and Rs. 4,49,54,750/- have been
debited from the said Greentech Steel Enterprises during
the period from 03.04.2021 to 16.11.2024. Further, Rs.
3,24,92,300/- and Rs. 2,54,00,000/- have been credited
and debited from Greentech Minerals Pvt. Ltd during the
period from 28.10.2021 to 21.01.2025 and 06.10.2020 to
15.03.2024 respectively. Rs. 98,10,900/- and Rs.
85,00,000/- have been credited and debited from Bizzare
Commercial Pvt. Ltd during the period from 26.11.2021 to
08.05.2023 and 08.10.2021 to 12.01.2022, respectively.
Further, the above stated entities have been prosecuted in
the above stated complaints filed by the DGGI.
12. Thus, it is established that while the above stated
entities are not in business, the bank accounts of the said
entities have been used by Amit Agarwal @ Vicky Bhalotia
for layering and deriving the proceeds of crime generated
out of illegal activities of fraudulently claiming ITC on the
strength of bogus invoices. Thus, it is established that the
said Amit Agarwal @ Vicky Bhalotia is knowingly indulged
in processes and activities of money laundering and has
caused a loss of Rs. 15.95 crores to the government
exchequer through the aforementioned illegal activities.
BBl
2025:JHHC:31170
13. On 08.05.2025, a search was conducted at the
premises of the petitioner, under Section 17 of the PMLA,
2002 and cash amounting to Rs.3,48, 500/- was seized,
and three electronic devices, including two mobile phones
and one laptop, were also seized.
14. The petitioner was summoned at the premises
under Section 50 of the PMLA, 2002 and thereafter, his
statement was recorded and subsequently arrested on
conclusion of search.
15. The petitioner was arrested on 08.05.2025 by the
ED and was provided arrest order, grounds of arrest and
"reasons to believe". The petitioner was produced before the
learned Special Court (PMLA), Ranchi on 08.05.2025 and
was remanded to the judicial custody.
16. Thereafter, the present petitioner preferred Misc.
Cri. Application No. 1005 of 2025 for grant of bail which
was rejected, vide order dated 19.06.2025 by the learned
Spl. Judge, PML Act, Ranchi, hence, the instant bail
application.
Argument advanced by the learned counsel for the
petitioner
17. Learned counsel appearing for the petitioner has
taken the following grounds in assailing the order
impugned that: -
(i) Even if the entire ECIR will be taken into
BBl
2025:JHHC:31170
consideration, no offence will be said to be
committed so as to attract the ingredients of
Sections 3 & 4 of the P.M.L. Act, 2002.
(ii) It has been contended that the petitioner has been
arrested arbitrarily and there was no necessity to
arrest the petitioner, due to the reason that, search
has been done on 08.05.2025 and on the same date,
he was arrested by the E.D.
(iii) The petitioner was never summoned by the
prosecution in this case.
(iv) There was no material before the E.D. to "reasons to
believe" that the petitioner has committed any
offence.
(v) Both the "ground of arrest" and reason to believe are
identical and ground of arrest lacks additional
parameters under Section 41 Cr.P.C., in addition to
satisfaction under Section 19(1) of the Act 2002.
(vi) The Officer forming reasons to believe and ground of
arrest are different from the person seeking ED
Remand under Section 187 BNSS, 2023 and having
material in possession. Herein, no authorization is
filed to show that the arresting officer was authorized
to arrest when the reasons to believe are not formed
on material in possession of such officer.
BBl
2025:JHHC:31170
(vii) Learned counsel for the petitioner, in order to
substantiate his aforesaid contentions, has relied
upon the ratio rendered by the Hon'ble Apex Court in
the cases of Pankaj Kumar Bansal V. Union of
India, reported in (2024) 7 SCC 576; V. Senthil
Balaji Vs. State Represented by Deputy Director
& Ors., [(2024) 3 SCC 51]; Prabir Purkayastha Vs.
State (NCT of Delhi), [2024 SCC OnLine 934]; and
recently in the case of Arvind Kejriwal Vs.
Directorate of Enforcement, [2024 SCC OnLine SC
1703] and in addition thereto, the judgment
rendered in the case of Vihaan Kumar v. State of
Haryana, 2025 SCC OnLine SC 269, has also been
relied upon.
(viii) Submission has also been made that the statutory
provision, as contained under Section 19(1) of the
PML Act, has been clarified by the Hon'ble Apex
Court, while dealing with PML Act, 2002 in the case
of Vijay Madanlal Choudhary and Ors. Vs. Union
of India and Ors., [(2022) SCC On Line SC 929]
and the same has not been followed herein and as
such, the arrest of the petitioner is illegal and
arbitrary.
(ix) The arrest itself by the respondent agency is arbitrary
and illegal, therefore, the rigors of Section 45 PMLA
BBl
2025:JHHC:31170
2002 does not apply to the present petitioner and as
such, prosecution has miserably failed to establish
even prima facie that the applicant has received any
proceeds of crime as the claim is entirely based upon
the conjecture and surmises.
(x) The submission has been made that the petitioner
has been implicated in the present case on the basis
of statement recorded under Section 50 of the PML
Act of the co-accused, who was in custody, hence,
the statement recorded under Section 50 of the PML
Act of the co-accused, who were already in custody,
cannot be used against the present petitioner as per
the mandate of judgment rendered by the Hon'ble
Apex Court in the case of Prem Prakash Vs. Union
of India through the directorate of enforcement,
2024 INSC 637.
(xi) The petitioner has no prior criminal record. The
petitioner has neither committed any fraud/cheating
or forged any documents, thus, no offences under the
aforementioned sections have been committed by the
petitioner.
(xii) There is no assertion that the petitioner attempted to
commit any offence delineated under the Prevention
of Money Laundering Act, particularly as delineated
in Section 3 of the statute.
BBl
2025:JHHC:31170
(xiii) The petitioner is in custody since 08.05.2025.
18. Learned counsel for the petitioner, based upon the
aforesaid grounds, has submitted that the learned court
while considering the prayer for bail ought to have taken
into consideration all these aspects of the matter both legal
and factual but having not done so, serious error has been
committed. Hence, it is a fit case where the petitioner is to
be given the privilege of bail.
Argument advanced by the learned counsel for the Opp.
Party/Directorate of Enforcement:
19. Per contra, Mr. Amit Kumar Das, learned counsel for
the Directorate of Enforcement, has vehemently opposed
the prayer for bail by taking the following grounds: -
(i) It has been contended that the petitioner is a
member of syndicate of co-accused persons namely
Shive Kumar Deora, Mohit Deora, Amit Gupta etc.
and he is also Director of fake shell companies as
also along with them, deliberately generating and
availing fake Input Tax Credit by issuing bogus
invoices and all of them are party with each other
in acquisition, possession, use and concealment of
proceeds of crime as well as claiming the said
proceeds of crime as untainted property.
(ii) The petitioner is one of the
directors/proprietors in various entities indulged in
BBl
2025:JHHC:31170
claiming ineligible ITC on bogus invoices without
delivering goods/services and caused a wrongful
loss of Rs.15.95 crores to the government
exchequer through illegal activities.
(iii) So far as the legality of arrest is concerned, the
arrest of the petitioner was made strictly in
accordance with the procedure laid down under
Section 19 of the Prevention of Money Laundering
Act, 2002 (hereinafter referred as "PMLA"), only
after the Authorized Officer of the Directorate of
Enforcement had formed a valid and reasoned
opinion based on material in possession that the
Petitioner was guilty of the offence of money
laundering.
(iv) The reliance placed by the Petitioner on the
judgments, such as Arvind Kejriwal v.
Directorate of Enforcement, (supra) Pankaj
Bansal v. Union of India, (supra) are misplaced
in the facts of the present case. The said decisions
only reinforce the requirement for proper
application of mind, existence of reasons, and
communication of grounds, all of which were duly
complied with in the present case. In fact, these
authorities uphold the power of arrest under
BBl
2025:JHHC:31170
Section 19 of PMLA where such procedural
safeguards are satisfied.
(v) The Hon'ble Supreme Court in Vijay
Madanlal Choudhary v. Union of India, (2022)
SCC OnLine SC 929, has clearly laid down that
once reasons to believe are recorded on the basis of
material, the scope of judicial review at the pre-trial
stage is limited.
(vi) Further, the arrest of the Petitioner is based on
cogent material evidencing his complicity in a
syndicate that has caused wrongful loss of more
than Rs. 48.19 crores to the public exchequer
through generation and transfer of fake ITC.
(vii) The submission of the Petitioner that he was
never previously summoned is factually incorrect.
He was summoned under Section 50 PMLA on
08.05.2025 which would be evident from
Annexure-2 appended with the instant petition and
his statement was recorded. The statement
revealed non-cooperative conduct and evasiveness
regarding the origin of huge cash transactions and
his involvement in shell entities used for
laundering proceeds of crime, thereby, justifying
the subsequent arrest.
BBl
2025:JHHC:31170
(viii) The contention of the Petitioner that the
reasons to believe and grounds of arrest are
identical, are factually misconceived and legally
untenable as both the "Reasons to Believe" and
"Grounds of Arrest" were recorded separately, in
writing, and were duly communicated to the
Petitioner at the time of arrest.
(ix) Reference to Section 41 of Cr.P.C. and its
parameters is wholly misplaced in the context of
PMLA. The arrest under Section 19(1) of PMLA does
not require compliance with Section 41 Cr.P.C.,
since the later governs police arrests under the
Code of Criminal Procedure. PMLA being a special
law, the provisions of Section 19(1) of PMLA
operate independently, with in-built safeguards
including the requirement of written reasons to
believe, furnishing of grounds of arrest, and
production before the Ld. Special Court within 24
hours and the aforesaid safeguard has fully been
complied herein.
(x) The petitioner has failed to explain about the
transactions which has been credited in his
account in the statement as recorded under
Section 50 of PMLA.
BBl
2025:JHHC:31170
(xi) Further, the petitioner was arrested on
08.05.2025 under Section 19 of PML Act, 2002,
after recording reasons to believe that the
petitioner is guilty of the offence of money
laundering, as defined under Section 3 and
punishable under Section 4 of PML Act, 2002.
(xii) It has been contended by referring to Section
3 of the PML Act, 2002 that the process or activity
connected with proceeds of crime is a continuing
activity and continues till such time, a person is
directly or indirectly enjoying the proceeds of crime
by its concealment or possession or acquisition or
use or projecting it as untainted property or
claiming it as untainted property in any manner
whatsoever.
(xiii) Each and every document has been supplied,
i.e., the grounds of arrest and reason to believe
which would be evident from the documents as
appended as Annexure-3 series showing the
acknowledgement of receipt of the petitioner.
(xiv) The learned counsel appearing for the O.P-
E.D., in response to the argument that the
implication of the petitioner is based upon the
statement made by the co-accused while he was in
custody, is absolutely incorrect, rather, the
BBl
2025:JHHC:31170
statement of the other persons(witnesses) have also
been taken as referred in ECIR being ECIR No.
RNZO/18/2024 who have disclosed that the
petitioner was active member of the syndicate and
actively participated in the alleged offence.
(xv) Submission has been made that ground which
has been advanced that neither the statement of
other co-accused persons is to be taken into
consideration since it is recorded while they were in
custody but the law is otherwise as has been held
by Hon'ble Apex Court in the case of Rohit
Tandon vs. Directorate of Enforcement, (2018)
11 SCC 46, wherein, the statement if recorded of
the co-accused persons in custody under Section
50 of the PML Act will also have the impact in
implicating a person under Section 3 of the PML
Act and exactly the case herein.
(xvi) It has also been contended that the petitioner
was not cooperating in the investigation.
(xvii) The petitioner is a key local operative and
master mind based in Jamshedpur, who controlled
several shell firms and facilitated the syndicate by
providing his own proprieties for the registration of
bogus firms. This syndicate, along with a network
of other associates, executed a large-scale fraud
BBl
2025:JHHC:31170
with operations in Jharkhand, West Bengal and
Delhi.
(xviii) The syndicate's criminal activities, as
detained in the DGGI complaints, followed a
meticulous and multi-layered modus operandi,
executed in a series of systematic steps designed to
generate and launder massive amounts of
fraudulent ITC.
(xix) It has further been contended that the
petitioner directly controlled several shell firms,
including M/s Aurorus Metal Pvt. Ltd. and M/s
Bizzare Commercial Pvt. Ltd. using dummy
directions to whom he made monthly payments. He
also facilitated the syndicate by providing his own
property for the registration of these bogus firms.
(xx) The "whats-app" chats recovered during the
DGGI investigation indicate his direct involvement
in giving operational instructions and managing
GST related deceptions. He was linked to fake ITC
availment of approximately Rs.48.10 Crores
through 9 firms.
20. Learned counsel for the Opp. Party-ED, based upon
the aforesaid grounds, has submitted that it is not a fit
case for grant of regular bail in favour of the petitioner.
BBl
2025:JHHC:31170
Analysis
21. Heard the learned counsel for the parties and
perused the documents available on record.
22. This Court, before appreciating the argument
advanced on behalf of the parties, deems it fit and proper to
discuss herein some of the provisions of law as contained
under the PML Act, 2002 (in short 'Act 2002') with its object
and intent as also the legal proposition as settled by the
Hon'ble Apex Court in various judgments.
23. The Act 2002 was enacted to address the urgent
need to have a comprehensive legislation inter alia for
preventing money-laundering, attachment of proceeds of
crime, adjudication and confiscation thereof including
vesting of it in the Central Government, setting up of
agencies and mechanisms for coordinating measures for
combating money-laundering and also to prosecute the
persons indulging in the process or activity connected with
the proceeds of crime.
24. It is evident that the Act 2002 was enacted in order
to answer the urgent requirement to have a comprehensive
legislation inter alia for preventing money-laundering,
attachment of proceeds of crime, adjudication and
confiscation thereof for combating money-laundering and
also to prosecute the persons indulging in the process or
activity connected with the proceeds of crime.
BBl
2025:JHHC:31170
25. The objective of the PMLA is to prevent money
laundering which has posed a serious threat not only to the
financial systems of the country but also to its integrity and
sovereignty. The offence of money laundering is a very
serious offence which is committed by an individual with a
deliberate desire and the motive to enhance his gains,
disregarding the interest of the nation and the society as a
whole, and such offence by no stretch of imagination can
be regarded as an offence of trivial nature. The stringent
provisions have been made in the Act to combat the
menace of money laundering.
26. It needs to refer herein the definition of "proceeds of
crime" as provided under Section 2(1)(u) of the Act, 2002
which reads as under:-
"2(u) "proceeds of crime" means any property
derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to a
scheduled offence or the value of any such property
[or where such property is taken or held outside the
country, then the property equivalent in value held
within the country] [or abroad]; [Explanation.--For
the removal of doubts, it is hereby clarified that
"proceeds of crime" include property not only
derived or obtained from the scheduled offence but
also any property which may directly or indirectly
be derived or obtained as a result of any criminal
activity relatable to the scheduled offence;]"
27. It is evident from the aforesaid provision by which
the "proceeds of crime" means any property derived or
BBl
2025:JHHC:31170
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value
of any such property or where such property is taken or
held outside the country, then the property equivalent in
value held within the country or abroad.
28. In the explanation, it has been referred that for the
removal of doubts, it is hereby clarified that "proceeds of
crime" include property not only derived or obtained from
the scheduled offence but also any property which may
directly or indirectly be derived or obtained as a result of
any criminal activity relatable to the scheduled offence.
29. It is, thus, evident that the reason for giving
explanation under Section 2(1)(u) is by way of clarification
to the effect that whether as per the substantive provision
of Section 2(1)(u), the property derived or obtained, directly
or indirectly, by any person as a result of criminal activity
relating to a scheduled offence or the value of any such
property or where such property is taken or held outside
the country then the property equivalent in value held
within the country but by way of explanation the proceeds
of crime has been given broader implication by including
property not only derived or obtained from the scheduled
offence but also any property which may directly or
indirectly be derived or obtained as a result of any criminal
activity relatable to the scheduled offence.
BBl
2025:JHHC:31170
30. Further, the "property" has been defined under
Section 2(1)(v) which means any property or assets of every
description, whether corporeal or incorporeal, movable or
immovable, tangible or intangible and includes deeds and
instruments evidencing title to, or interest in, such property
or assets, wherever located.
31. The schedule has been defined under Section 2(1)(x)
which means schedule to the Prevention of Money
Laundering Act, 2002.
32. It is evident that the "scheduled offence" means the
offences specified under Part A of the Schedule; or the
offences specified under Part B of the Schedule if the total
value involved in such offences is [one crore rupees] or
more; or the offences specified under Part C of the
Schedule.
33. The offence of money laundering has been defined
under Section 3 of the Act, 2002 which reads as under: -
"3. Offence of money-laundering.--Whosoever
directly or indirectly attempts to indulge or knowingly
assists or knowingly is a party or is actually involved
in any process or activity connected with the
[proceeds of crime including its concealment,
possession, acquisition or use and projecting or
claiming] it as untainted property shall be guilty of
offence of money-laundering.
[Explanation.-- For the removal of doubts, it is
hereby clarified that,--
(i) a person shall be guilty of offence of money-
laundering if such person is found to have directly or
BBl
2025:JHHC:31170
indirectly attempted to indulge or knowingly assisted
or knowingly is a party or is actually involved in one
or more of the following processes or activities
connected with proceeds of crime, namely:--
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property, in any
manner whatsoever;
(ii) the process or activity connected with proceeds of
crime is a continuing activity and continues till such
time a person is directly or indirectly enjoying the
proceeds of crime by its concealment or possession or
acquisition or use or projecting it as untainted
property or claiming it as untainted property in any
manner whatsoever.]"
34. It is evident from the aforesaid provision that
"offence of money-laundering" means whosoever directly or
indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process
or activity connected with the proceeds of crime including
its concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall be
guilty of offence of money-laundering.
35. It is further evident that the process or activity
connected with proceeds of crime is a continuing activity
and continues till such time a person is directly or
indirectly enjoying the proceeds of crime by its concealment
or possession or acquisition or use or projecting it as
BBl
2025:JHHC:31170
untainted property or claiming it as untainted property in
any manner whatsoever.
36. The punishment for money laundering has been
provided under Section 4 of the Act, 2002.
37. Further, the specific provision has been made under
the PML Act, 2002 to be followed at the time of arrest, i.e.,
the ground of arrest is to be informed to the person facing
the accusation as soon as possible that is the original text
of Section 19(1) of the Act, 2002.
38. Section 50 of the Act, 2002 confers power upon the
authorities regarding summons, production of documents
and to give evidence.
39. The various provisions of the Act, 2002 along with
interpretation of the definition of "proceeds of crime" has
been dealt with by the Hon'ble Apex Court in the case of
Vijay Madanlal Choudhary and Ors. Vs. Union of India
and Ors. (supra), wherein, the Bench comprising of three
Hon'ble Judges of the Hon'ble Supreme Court have decided
the issue by taking into consideration the object and intent
of the Act, 2002.
40. The predicate offence has been considered in the
aforesaid judgment wherein by taking into consideration
the explanation as inserted by way of Act 23 of 2019 under
the definition of the "proceeds of crime" as contained under
Section 2(1)(u), whereby and whereunder, it has been
BBl
2025:JHHC:31170
clarified for the purpose of removal of doubts that, the
"proceeds of crime" include property not only derived or
obtained from the scheduled offence but also any property
which may directly or indirectly be derived or obtained as a
result of any criminal activity relatable to the scheduled
offence, meaning thereby, the words "any property which
may directly or indirectly be derived or obtained as a result
of any criminal activity relatable to the scheduled offence"
will come under the fold of the proceeds of crime.
41. It needs to refer herein that the various provisions
of the Act, 2002 along with interpretation of the definition
of "proceeds of crime" has been dealt with by the Hon'ble
Apex Court in the case of Vijay Madanlal Choudhary and
Ors. Vs. Union of India and Ors. (supra) wherein it has
been held at paragraphs-128, 129 and 130 of the said
judgment as under:-
"128. To put it differently, the section as it stood prior to 2019
had itself incorporated the expression "including", which is
indicative of reference made to the different process or activity
connected with the proceeds of crime. Thus, the principal
provision (as also the Explanation) predicates that if a person is
found to be directly or indirectly involved in any process or
activity connected with the proceeds of crime must be held guilty
of offence of money laundering. If the interpretation set forth by
the petitioners was to be accepted, it would follow that it is only
upon projecting or claiming the property in question as untainted
property, the offence would be complete. This would undermine
the efficacy of the legislative intent behind Section 3 of the Act
and also will be in disregard of the view expressed by the FATF
BBl
2025:JHHC:31170
in connection with the occurrence of the word "and" preceding
the expression "projecting or claiming" therein.
129. This Court in Pratap Singh v. State of Jharkhand,
enunciated that the international treaties, covenants and
conventions although may not be a part of municipal law, the
same be referred to and followed by the Courts having regard to
the fact that India is a party to the said treaties. This Court went
on to observe that the Constitution of India and other ongoing
statutes have been read consistently with the rules of
international law. It is also observed that the Constitution of
India and the enactments made by Parliament must necessarily
be understood in the context of the present-day scenario and
having regard to the international treaties and convention as our
constitution takes note of the institutions of the world community
which had been created.
130. In Apparel Export Promotion Council v. A.K. Chopra, the
Court observed that domestic Courts are under an obligation to
give due regard to the international conventions and norms for
construing the domestic laws, more so, when there is no
inconsistency between them and there is a void in domestic law.
This view has been restated in Githa Hariharan, as also in
People's Union for Civil Liberties, and National Legal Services
Authority v. Union of India."
42. The implication of Section 50 has also been taken
into consideration. Relevant paragraph, i.e., paragraphs-
327 to 332, 338, 339, 342 are quoted as under:
"327. The validity of this provision has been challenged on the
ground of being violative of Articles 20(3) and 21 of the
Constitution. For, it allows the authorised officer under the 2002 Act
to summon any person and record his statement during the course of
investigation. Further, the provision mandates that the person
should disclose true and correct facts known to his personal
knowledge in connection with the subject matter of investigation.
The person is also obliged to sign the statement so given with the
threat of being punished for the falsity or incorrectness thereof in
terms of Section 63 of the 2002 Act. Before we proceed to analyse
BBl
2025:JHHC:31170
the matter further, it is apposite to reproduce Section 50 of the 2002
Act, as amended. -----:
330. By this provision, the Director has been empowered to exercise
the same powers as are vested in a civil Court under the 1908 Code
while trying a suit in respect of matters specified in sub-section (1).
This is in reference to Section 13 of the 2002 Act dealing with
powers of Director to impose fine in respect of acts of commission
and omission by the banking companies, financial institutions and
intermediaries. From the setting in which Section 50 has been
placed and the expanse of empowering the Director with same
powers as are vested in a civil Court for the purposes of imposing
fine under Section 13, is obviously very specific and not otherwise.
331. Indeed, sub-section (2) of Section 50 enables the Director,
Additional Director, Joint Director, Deputy Director or Assistant
Director to issue summon to any person whose attendance he
considers necessary for giving evidence or to produce any records
during the course of any investigation or proceeding under this Act.
We have already highlighted the width of expression "proceeding"
in the earlier part of this judgment and held that it applies to
proceeding before the Adjudicating Authority or the Special Court,
as the case may be. Nevertheless, sub-section (2) empowers the
authorised officials to issue summon to any person. We fail to
understand as to how Article 20(3) would come into play in respect
of process of recording statement pursuant to such summon which is
only for the purpose of collecting information or evidence in respect
of proceeding under this Act. Indeed, the person so summoned, is
bound to attend in person or through authorised agent and to state
truth upon any subject concerning which he is being examined or is
expected to make statement and produce documents as may be
required by virtue of sub-section (3) of Section 50 of the 2002 Act.
The criticism is essentially because of subsection (4) which provides
that every proceeding under sub-sections (2) and (3) shall be
deemed to be a judicial proceeding within the meaning of Sections
193 and 228 of the IPC. Even so, the fact remains that Article 20(3)
or for that matter Section 25 of the Evidence Act, would come into
play only when the person so summoned is an accused of any
offence at the relevant time and is being compelled to be a witness
against himself. This position is well-established.
BBl
2025:JHHC:31170
332.The Constitution Bench of this Court in M.P. Sharma had dealt
with a similar challenge wherein warrants to obtain documents
required for investigation were issued by the Magistrate being
violative of Article 20(3) of the Constitution. This Court opined that
the guarantee in Article 20(3) is against "testimonial compulsion"
and is not limited to oral evidence. Not only that, it gets triggered if
the person is compelled to be a witness against himself, which may
not happen merely because of issuance of summons for giving oral
evidence or producing documents. Further, to be a witness is
nothing more than to furnish evidence and such evidence can be
furnished by different modes. The Court went on to observe as
follows: "Broadly stated the guarantee in article 20(3) is against
"testimonial compulsion". It is suggested that this is confined to the
oral evidence of a person standing his trial for an offence when
called to the witness-stand. We can see no reason to confine the
content of the constitutional guarantee to this barely literal import.
So to limit it would be to rob the guarantee of its substantial purpose
and to miss the substance for the sound as stated in certain
American decisions. The phrase used in Article 20(3) is "to be a
witness". A person can "be a witness" not merely by giving oral
evidence but also by producing documents or making intelligible
gestures as in the case of a dumb witness (See section 119 of the
Evidence Act) or the like. "To be a witness" is nothing more than
"to furnish evidence", and such evidence can be furnished through
the lips or by production of a thing or of a document or in other
modes. So far as production of documents is concerned, no doubt
Section 139 of the Evidence Act says that a person producing a
document on summons is not a witness. But that section is meant to
regulate the right of cross examination. It is not a guide to the
connotation of the word "witness", which must be understood in its
natural sense, i.e., as referring to a person who furnishes evidence.
Indeed, every positive volitional act which furnishes evidence is
testimony, and testimonial compulsion connotes coercion which
procures the positive volitional evidentiary acts of the person, as
opposed to the negative attitude of silence or submission on his part.
Nor is there any reason to think that the protection in respect of the
evidence so procured is confined to what transpires at the trial in
the court room. The phrase used in article 20(3) is "to be a witness"
and not to "appear as a witness". It follows that the protection
BBl
2025:JHHC:31170
afforded to an accused in so far as it is related to the phrase "to be
a witness" is not merely in respect of testimonial compulsion in the
court room but may well extend to compelled testimony previously
obtained from him. It is available therefore to a person against
whom a formal accusation relating to the commission of an offence
has been levelled which in the normal course may result in
prosecution. Whether it is available to other persons in other
situations does not call for decision in this case." (emphasis
supplied)
338. In the context of the 2002 Act, it must be remembered that the
summon is issued by the Authority under Section 50 in connection
with the inquiry regarding proceeds of crime which may have been
attached and pending adjudication before the Adjudicating
Authority. In respect of such action, the designated officials have
been empowered to summon any person for collection of
information and evidence to be presented before the Adjudicating
Authority. It is not necessarily for initiating a prosecution against
the noticee as such. The power entrusted to the designated officials
under this Act, though couched as investigation in real sense, is to
undertake inquiry to ascertain relevant facts to facilitate initiation of
or pursuing with an action regarding proceeds of crime, if the
situation so warrants and for being presented before the
Adjudicating Authority. It is a different matter that the information
and evidence so collated during the inquiry made, may disclose
commission of offence of money-laundering and the involvement of
the person, who has been summoned for making disclosures
pursuant to the summons issued by the Authority. At this stage, there
would be no formal document indicative of likelihood of involvement
of such person as an accused of offence of money laundering. If the
statement made by him reveals the offence of money laundering or
the existence of proceeds of crime, that becomes actionable under
the Act itself.
339.To put it differently, at the stage of recording of statement for
the purpose of inquiring into the relevant facts in connection with
the property being proceeds of crime is, in that sense, not an
investigation for prosecution as such; and in any case, there would
be no formal accusation against the noticee. Such summons can be
issued even to witnesses in the inquiry so conducted by the
authorised officials. However, after further inquiry on the basis of
BBl
2025:JHHC:31170
other material and evidence, the involvement of such person
(noticee) is revealed, the authorised officials can certainly proceed
against him for his acts of commission or omission. In such a
situation, at the stage of issue of summons, the person cannot claim
protection under Article 20(3) of the Constitution. However, if
his/her statement is recorded after a formal arrest by the ED
official, the consequences of Article 20(3) or Section 25 of the
Evidence Act may come into play to urge that the same being in the
nature of confession, shall not be proved against him. Further, it
would not preclude the prosecution from proceeding against such a
person including for consequences under Section 63 of the 2002 Act
on the basis of other tangible material to indicate the falsity of his
claim. That would be a matter of rule of evidence.
342. It is, thus, clear that the power invested in the officials is one
for conducting inquiry into the matters relevant for ascertaining
existence of proceeds of crime and the involvement of persons in the
process or activity connected therewith so as to initiate appropriate
action against such person including of seizure, attachment and
confiscation of the property eventually vesting in the Central
Government."
43. It is evident from the observation so made as above
that the purposes and objects of the 2002 Act, for
which, it has been enacted, is not limited to
punishment for offence of money-laundering, but also
to provide measures for prevention of money-
laundering. It is also to provide for attachment of
proceeds of crime, which are likely to be concealed,
transferred or dealt with in any manner which may
result in frustrating any proceeding relating to
confiscation of such proceeds under the 2002 Act. This
Act is also to compel the banking companies, financial
institutions and intermediaries to maintain records of
BBl
2025:JHHC:31170
the transactions, to furnish information of such
transactions within the prescribed time in terms of
Chapter IV of the 2002 Act.
44. So far as the purport of Section 45(1)(i) & (ii) is
concerned, the aforesaid provision starts from the non-
obstante clause that notwithstanding anything
contained in the Code of Criminal Procedure, 1973, no
person accused of an offence under this Act shall be
released on bail or on his own bond unless-
(i) the Public Prosecutor has been given an
opportunity to oppose the application for such
release; and
(ii) where the Public Prosecutor opposes the
application, the court is satisfied that there are
reasonable grounds for believing that he is not
guilty of such offence and that he is not likely to
commit any offence while on bail.
45. Sub-section (2) thereof puts limitation on granting
bail specific in sub-section (1) in addition to the
limitations under the Code of Criminal Procedure, 1973
or any other law for the time being in force on granting
of bail.
46. The explanation is also there as under sub-section
(2) thereof which is for the purpose of removal of doubts,
a clarification has been inserted that the expression
BBl
2025:JHHC:31170
"Offences to be cognizable and non-bailable" shall mean
and shall be deemed to have always meant that all
offences under this Act shall be cognizable offences and
non-bailable offences notwithstanding anything to the
contrary contained in the Code of Criminal Procedure,
1973, and accordingly the officers authorised under this
Act are empowered to arrest an accused without
warrant, subject to the fulfilment of conditions under
section 19 and subject to the conditions enshrined
under this section
47. The fact about the implication of Section 45 has
been interpreted by the Hon'ble Apex Court in Vijay
Madanlal Choudhary and Ors. Vs. Union of India
and Ors. (supra) at paragraphs-285, 286 and 316. For
ready reference, the said paragraphs are being referred
as under:-
"285..............The provision post the 2018
Amendment, is in the nature of no bail in relation to
the offence of money laundering unless the twin
conditions are fulfilled. The twin conditions are
that there are reasonable grounds for believing that
the accused is not guilty of offence of money
laundering and that he is not likely to commit any
offence while on bail.
286. Considering the purposes and objects of the
legislation in the form of the 2002 Act and the
background in which it had been enacted owing to
the commitment made to the international bodies
and on their recommendations, it is plainly clear
BBl
2025:JHHC:31170
that it is a special legislation to deal with the
subject of money laundering activities having
transnational impact on the financial systems
including sovereignty and integrity of the countries.
This is not an ordinary offence. To deal with such
serious offence, stringent measures are provided in
the 2002 Act for prevention of money laundering
and combating menace of money laundering,
including for attachment and confiscation of
proceeds of crime and to prosecute persons
involved in the process or activity connected with
the proceeds of crime. In view of the gravity of the
fallout of money laundering activities having
transnational impact, a special procedural law for
prevention and regulation, including to prosecute
the person involved, has been enacted, grouping
the offenders involved in the process or activity
connected with the proceeds of crime as a separate
class from ordinary criminals. The offence of money
laundering has been regarded as an aggravated
form of crime "world over". It is, therefore, a
separate class of offence requiring effective and
stringent measures to combat the menace of money
laundering.
316. As a result, we have no hesitation in
observing that in whatever form the relief is
couched including the nature of proceedings, be it
under Section 438 of the 1973 Code or for that
matter, by invoking the jurisdiction of the
constitutional court, the underlying principles and
rigours of Section 45 of the 2002 Act must come
into play and without exception ought to be
reckoned to uphold the objectives of the 2002 Act,
which is a special legislation providing for stringent
regulatory measures for combating the menace of
money laundering."
BBl
2025:JHHC:31170
48. The fact about the implication of Section 45
has further been interpreted by the Hon'ble Apex Court
in Vijay Madanlal Choudhary and Ors. Vs. Union of
India and Ors. (supra) at paragraphs-268, 269 & 270
also. For ready reference, the said paragraphs are being
referred as under:
"268. Section 45 has been amended vide Act 20 of 2005, Act 13
of 2018 and Finance (No. 2) Act, 2019. The provision as it
obtained prior to 23.11.2017 read somewhat differently. The
constitutional validity of Sub-section (1) of Section 45, as it
stood then, was considered in Nikesh Tarachand Shah. This
Court declared Section 45(1) of the 2002 Act, as it stood then,
insofar as it imposed two further conditions for release on bail,
to be unconstitutional being violative of Articles 14 and 21 of
the Constitution. The two conditions which have been mentioned
as twin conditions are: (i) that there are reasonable grounds for
believing that he is not guilty of such offence; and (ii) that he is
not likely to commit any offence while on bail.
269. According to the petitioners, since the twin conditions have
been declared to be void and unconstitutional by this Court, the
same stood obliterated. To buttress this argument, reliance has
been placed on the dictum in State of Manipur.
270. The first issue to be answered by us is: whether the twin
conditions, in law, continued to remain on the statute book post
decision of this Court in Nikesh Tarachand Shah and if yes, in
view of the amendment effected to Section 45(1) of the 2002 Act
vide Act 13 of 2018, the declaration by this Court will be of no
consequence. This argument need not detain us for long. We say
so because the observation in State of Manipur in paragraph of
the judgment that owing to the declaration by a Court that the
statute is unconstitutional obliterates the statute entirely as
though it had never been passed, is contextual. In this case, the
Court was dealing with the efficacy of the repealing Act. While
doing so, the Court had adverted to the repealing Act and made
the stated observation in the context of lack of legislative power.
BBl
2025:JHHC:31170
In the process of reasoning, it did advert to the exposition in
BehramKhurshidPesikaka and Deep Chand including American
jurisprudence expounded in Cooley on Constitutional
Limitations and Norton v. Shelby County."
49. Subsequently, the Hon'ble Apex Court in the case of
Tarun Kumar vs. Assistant Director Directorate of
Enforcement, (2023) SCC OnLine SC 1486 by taking into
consideration the law laid down by the Larger Bench of the
Hon'ble Apex Court in Vijay Madanlal Choudhary and
Ors. Vs. Union of India and Ors. (supra), it has been laid
down that since the conditions specified under Section 45
are mandatory, they need to be complied with. The Court is
required to be satisfied that there are reasonable grounds
for believing that the accused is not guilty of such offence
and he is not likely to commit any offence while on bail.
50. It has further been observed that as per the
statutory presumption permitted under Section 24 of the
Act, the Court or the Authority is entitled to presume
unless the contrary is proved, that in any proceedings
relating to proceeds of crime under the Act, in the case of a
person charged with the offence of money laundering under
Section 3, such proceeds of crime are involved in money
laundering. Such conditions enumerated in Section 45 of
PML Act will have to be complied with even in respect of an
application for bail made under Section 439 Cr. P.C. in view
of the overriding effect given to the PML Act over the other
BBl
2025:JHHC:31170
law for the time being in force, under Section 71 of the PML
Act. For ready reference, paragraph-17 of the said
judgment reads as under:-
"17. As well settled by now, the conditions specified
under Section 45 are mandatory. They need to be
complied with. The Court is required to be satisfied
that there are reasonable grounds for believing that
the accused is not guilty of such offence and he is not
likely to commit any offence while on bail. It is
needless to say that as per the statutory presumption
permitted under Section 24 of the Act, the Court or the
Authority is entitled to presume unless the contrary is
proved, that in any proceedings relating to proceeds of
crime under the Act, in the case of a person charged
with the offence of money laundering under Section 3,
such proceeds of crime are involved in money
laundering. Such conditions enumerated in Section 45
of PML Act will have to be complied with even in
respect of an application for bail made under Section
439 Cr. P.C. in view of the overriding effect given to the
PML Act over the other law for the time being in force,
under Section 71 of the PML Act."
51. The Hon'ble Apex Court in the said judgment has
further laid down that the twin conditions as to fulfil the
requirement of Section 45 of the Act, 2002 before granting
the benefit of bail is to be adhered to which has been dealt
with by the Hon'ble Apex Court in Vijay Madanlal
Choudhary and Ors. Vs. Union of India and Ors. (supra)
wherein, it has been observed that the accused is not guilty
of the offence and is not likely to commit any offence while
on bail.
BBl
2025:JHHC:31170
52. In the judgment rendered by the Hon'ble Apex Court
in Vijay Madanlal Choudhary and Ors. Vs. Union of
India and Ors. (supra) it has been held that the Authority
under the 2002 Act, is to prosecute a person for offence of
money-laundering only if it has reason to believe, which is
required to be recorded in writing that the person is in
possession of "proceeds of crime". Only if that belief is
further supported by tangible and credible evidence
indicative of involvement of the person concerned in any
process or activity connected with the proceeds of crime,
action under the Act can be taken forward for attachment
and confiscation of proceeds of crime and until vesting
thereof in the Central Government, such process initiated
would be a standalone process.
53. So far as the issue of grant of bail under Section 45
of the Act, 2002 is concerned, in the case of Vijay
Madanlal Choudhary and Ors. Vs. Union of India and
Ors. (supra) it has been held therein by making
observation that whatever form the relief is couched
including the nature of proceedings, be it under Section
438 of the 1973 Code or for that matter, by invoking the
jurisdiction of the Constitutional Court, the underlying
principles and rigors of Section 45 of the 2002 must come
into play and without exception ought to be reckoned to
uphold the objectives of the 2002 Act, which is a special
BBl
2025:JHHC:31170
legislation providing for stringent regulatory measures for
combating the menace of money-laundering.
54. The Hon'ble Apex Court in the case of Gautam
Kundu vs. Directorate of Enforcement (Prevention of
Money-Laundering Act), Government of India through
Manoj Kumar, Assistant Director, Eastern Region,
reported in (2015) 16 SCC 1 has been pleased to hold at
paragraph-30 that the conditions specified under Section
45 of PMLA are mandatory and need to be complied with,
which is further strengthened by the provisions of Section
65 and also Section 71 of PMLA.
55. Section 65 requires that the provisions of CrPC
shall apply insofar as they are not inconsistent with the
provisions of this Act and Section 71 provides that the
provisions of PMLA shall have overriding effect
notwithstanding anything inconsistent therewith contained
in any other law for the time being in force. PMLA has an
overriding effect and the provisions of CrPC would apply
only if they are not inconsistent with the provisions of this
Act.
56. Therefore, the conditions enumerated in Section 45
of PMLA will have to be complied with even in respect of an
application for bail made under Section 439 CrPC. That
coupled with the provisions of Section 24 provides that
unless the contrary is proved, the authority or the Court
BBl
2025:JHHC:31170
shall presume that proceeds of crime are involved in
money-laundering and the burden to prove that the
proceeds of crime are not involved, lies on the petitioner.
57. It requires to refer herein that the Hon'ble Apex
Court in the case of Satender Kumar Antil vs. CBI and
Anr., (2022) 10 SCC 51 has passed the order that if the
investigation has been completed and if there is full
cooperation of the accused persons, there may not be any
arrest. The Hon'ble Apex Court categorised the offences in
different group for purpose of bail. For ready reference,
Paragraph-2 of the aforesaid judgment reads as under:
"2. After allowing the application for intervention, an
appropriate order was passed on 7-10-2021 [Satender Kumar
Antil v. CBI, (2021) 10 SCC 773 : (2022) 1 SCC (Cri) 153] . The
same is reproduced as under : (Satender Kumar Antil case
[Satender Kumar Antil v. CBI, (2021) 10 SCC 773 : (2022) 1
SCC (Cri) 153] , SCC pp. 774-76, paras 2-11)
"2. We have been provided assistance both by Mr S.V. Raju,
learned Additional Solicitor General and Mr Sidharth Luthra,
learned Senior 28 B.A. No. 8321 of 2024 2025:JHHC:12446
Counsel and there is broad unanimity in terms of the
suggestions made by the learned ASG. In terms of the
suggestions, the offences have been categorised and guidelines
are sought to be laid down for grant of bail, without fettering the
discretion of the courts concerned and keeping in mind the
statutory provisions.
3. We are inclined to accept the guidelines and make them
a part of the order of the Court for the benefit of the courts
below. The guidelines are as under:
'Categories/Types of Offences
(A) Offences punishable with imprisonment of 7 years or less
not falling in Categories B & D.
BBl
2025:JHHC:31170
(B) Offences punishable with death, imprisonment for life, or
imprisonment for more than 7 years.
(C) Offences punishable under Special Acts containing
stringent provisions for bail like NDPS (Section 37), PMLA
(Section 45), UAPA [Section 43-D(5)], Companies Act, [Section
212(6)], etc. (D) Economic offences not covered by Special Acts.
REQUISITE CONDITIONS
(1) Not arrested during investigation.
(2) Cooperated throughout in the investigation including
appearing before investigating officer whenever called.
(No need to forward such an accused along with the charge-
sheet (Siddharth v. State of U.P. [Siddharth v. State of U.P.,
(2022) 1 SCC 676 : (2022) 1 SCC (Cri) 423] )
CATEGORY A
After filing of charge-sheet/complaint taking of cognizance
(a) Ordinary summons at the 1st instance/including permitting
appearance through lawyer.
(b) If such an accused does not appear despite service of
summons, then bailable warrant for physical appearance may
be issued.
(c) NBW on failure to appear despite issuance of bailable
warrant.
(d) NBW may be cancelled or converted into a bailable
warrant/summons without insisting physical appearance of the
accused, if such an application is moved on behalf of the
accused before execution of the NBW on an undertaking of the
accused to appear physically on the next date/s of hearing.
(e) Bail applications of such accused on appearance may be
decided without the accused being taken in physical custody or
by granting interim bail till the bail application is decided.
CATEGORIES B/D
On appearance of the accused in court pursuant to process
issued bail application to be decided on merits.
CATEGORY C
Same as Categories B and D with the additional condition of
compliance of the provisions of Bail under NDPS (Section 37),
Section 45 of the PMLA, Section 212(6) of the Companies Act,
Section 43-D(5) of the UAPA, POSCO, etc.
BBl
2025:JHHC:31170
58. It needs to refer herein that while dealing with bail
applications under UAP Act 1967, the Hon'ble Apex Court
recently in the case of Gurwinder Singh Vs. State of
Punjab and Anr., reported in (2024) SCC OnLine SC 109,
has observed that the conventional idea in bail
jurisprudence vis-à-vis ordinary penal offences that the
discretion of Courts must tilt in favour of the oft-quoted
phrase - 'bail is the rule, jail is the exception' - unless
circumstances justify otherwise - does not find any place
while dealing with bail applications under UAP Act and the
'exercise' of the general power to grant bail under the UAP
Act is severely restrictive in scope. For ready reference,
relevant paragraph of the said judgment is being referred as
under:
"28. The conventional idea in bail jurisprudence vis-à-
vis ordinary penal offences that the discretion of
Courts must tilt in favour of the oft-quoted phrase -
'bail is the rule, jail is the exception' - unless
circumstances justify otherwise - does not find any
place while dealing with bail applications under UAP
Act. The 'exercise' of the general power to grant bail
under the UAP Act is severely restrictive in scope. The
form of the words used in proviso to Section 43D (5)-
'shall not be released' in contrast with the form of the
words as found in Section 437(1) CrPC - 'may be
released' - suggests the intention of the Legislature to
make bail, the exception and jail, the rule."
BBl
2025:JHHC:31170
59. The reason for making reference of this judgment is
that in the case of Satender Kumar Antil vs. CBI and
Anr. (supra), the UAPA has also been brought under the
purview of category 'c' wherein while observing that in the
UAPA Act, it comes under the category 'c' which also
includes money laundering offence wherein the bail has
been directed to be granted if the investigation is complete
but the Hon'ble Apex Court in Gurwinder Singh vs. State
of Punjab and Anr. (supra) has taken the view by making
note that the penal offences as enshrined under the
provision of UAPA are also under category 'c' making
reference that jail is the rule and bail is the exception.
60. In the backdrop of the aforesaid legal provisions and
settled law, this court is now adverting to merit of the case.
Issue of legality of Arrest
61. Now coming to the ground as has been raised on
behalf of the petitioner that at the time of arrest the
condition stipulated under Section 19(1) of the PML Act,
2002 has not been followed and further, the settled position
of law as settled by the Hon'ble Apex Court has also not
been followed, hence, the very arrest of the petitioner is per
se illegal and in that view of the matter, the order of arrest
is fit to be quashed and set aside and in consequence
thereof, appellant may be directed to be released from
judicial custody.
BBl
2025:JHHC:31170
62. Per contra, learned counsel for the Opp. Party-ED
has submitted that it is incorrect on the part of the
petitioner to take the ground that the mandate of Section
19 (1) has not been followed, rather, the mandate of Section
19 has fully been complied with on the day when the
petitioner was arrested, which would be evident from
Annexure-2 and 3 as the same has been appended with the
petition, in which, the entire details has been furnished
regarding the ground of arrest and reason to believe for
arrest of the present petitioner.
63. In the aforesaid context, it needs to refer herein the
core of the Section 19 the Act 2002, for ready reference, the
same is being quoted as under:
"19. Power to Arrest.--(1) if the director, deputy director,
assistant director or any other officer authorised in this behalf
by the central government by general or special order, has on
the basis of material in his possession, reason to believe (the
reason for such belief to be recorded in writing) that any person
has been guilty of an offence punishable under this act, he may
arrest such person and shall, as soon as may be, inform him of
the grounds for such arrest.
(2) the director, deputy director, assistant director or any other
officer shall, immediately after arrest of such person under sub-
section (1), forward a copy of the order along with the material
in his possession, referred to in that sub-section, to the
adjudicating authority, in a sealed envelope, in the manner as
may be prescribed and such adjudicating authority shall keep
such order and material for such period, as may be prescribed.
(3) every person arrested under sub-section (1) shall, within
twenty-four hours, be taken to a 78[special court or] judicial
BBl
2025:JHHC:31170
magistrate or a metropolitan magistrate, as the case may be,
having jurisdiction:
provided that the period of twenty-four hours shall exclude the
time necessary for the journey from the place of arrest to the
79[special court or] magistrate's court."
64. It is evident from perusal of the Section 19 of PMLA
which gives the power to arrest if the officer concerned has
"reason to believe" on the basis of material in his
possession, that the person is guilty. As per Section 19 the
arrest has to be on the basis of material in possession with
the ED, there is reason to believe that the accused is guilty
of the offence, with the reason recorded in writing and the
grounds for arrest should be communicated with the
accused.
65. As discussed herein above the entire PML Act, 2002
fell for consideration before the three-Judge Bench of the
Hon'ble Apex Court in the case of Vijay Madanlal
Choudhary & Ors. Vs. Union of India & Ors. (supra)
wherein the provision of Section 19(1) has also been taken
into consideration, which would be evident from the
relevant paragraphs, which reads as under:
"371. The next issue is : Whether it is necessary to furnish copy
of ECIR to the person concerned apprehending arrest or at least
after his arrest? Section 19(1) of the 2002 Act postulates that
after arrest, as soon as may be, the person should be informed
about the grounds for such arrest. This stipulation is compliant
with the mandate of Article 22(1) of the Constitution. Being a
special legislation and considering the complexity of the
inquiry/investigation both for the purposes of initiating civil
BBl
2025:JHHC:31170
action as well as prosecution, non supply of ECIR in a given
case cannot be faulted. The ECIR may contain details of the
material in possession of the authority and recording
satisfaction of reason to believe that the person is guilty of
money laundering offence, if revealed before the
inquiry/investigation required to proceed against the property
being proceeds of crime including to the person involved in the
process or activity connected therewith, may have deleterious
impact on the final outcome of the inquiry/investigation. So long
as the person has been informed about grounds of his arrest that
is sufficient compliance of mandate of Article 22(1) of the
Constitution. Moreover, the arrested person before being
produced before the Special Court within twenty-four hours or
for that purposes of remand on each occasion, the court is free
to look into the relevant records made available by the authority
about the involvement of the arrested person in the offence of
money laundering. In any case, upon filing of the complaint
before the statutory period provided in the 1973 Code, after
arrest, the person would get all relevant materials forming part
of the complaint filed by the authority under Section 44(1)(b) of
the 2002 Act before the Special Court.
372. Viewed thus, supply of ECIR in every case to the person
concerned is not mandatory. From the submissions made across
the Bar, it is noticed that in some cases ED has furnished copy
of ECIR to the person before filing of the complaint. That does
not mean that in every case same procedure must be followed. It
is enough, if ED at the time of arrest, contemporaneously
discloses the grounds of such arrest to such person. Suffice it to
observe that ECIR cannot be equated with an FIR which is
mandatorily required to be recorded and supplied to the
accused as per the provisions of the 1973 Code. Revealing a
copy of an ECIR, if made mandatory, may defeat the purpose
sought to be achieved by the 2002 Act including frustrating the
attachment of property (proceeds of crime). Non-supply of
ECIR, which is essentially an internal document of ED, cannot
be cited as violation of constitutional right. Concededly, the
person arrested, in terms of Section 19 of the 2002 Act, is
contemporaneously made aware about the grounds of his arrest.
BBl
2025:JHHC:31170
This is compliant with the mandate of Article 22(1) of the
Constitution."
66. It is evident from the aforesaid consideration as
referred in the aforesaid judgment that once the person is
informed of the grounds of arrest, that would be sufficient
compliance with the mandate of Article 22(1) of the
Constitution and it is not necessary that a copy of the ECIR
be supplied in every case to the person concerned, as such,
a condition is not mandatory and it is enough if ED
discloses the grounds of arrest to the person concerned at
the time of arrest.
67. It needs to refer herein the judgment which has
come in the case of V. Senthil Balaji Vs. State
Represented by Deputy Director & Ors. (supra) which
was passed on 07.08.2023 wherein consideration has been
given with respect to the issue of Section 19(1) holding
therein that that after forming a reason to believe that the
person has been guilty of an offence punishable under
PMLA, the officer concerned is at liberty to arrest him, while
performing his mandatory duty of recording the reasons,
and that the said exercise has to be followed by way of an
information being served on the arrestee of the grounds of
arrest.
68. Subsequent thereto, the matter has again come
before the Hon'ble Apex Court in the case of Pankaj
BBl
2025:JHHC:31170
Bansal Vs. Union of India & Ors (supra), wherein, the
factual aspect pertaining to the said case was that no
written communication was made and only on the basis of
oral communication of reason of arrest, the said Pankaj
Bansal has taken into custody, which would be evident
from discussion of the factual aspect, which would be
evident from following paragraphs of the judgment, which
reads as under:
"2. The genesis of these appeals is traceable to FIR No. 0006
dated 17-4 2023 registered by the Anti-Corruption Bureau,
Panchkula, Haryana, under Sections 7, 8, 11 and 13 of the
Prevention of Corruption Act, 1988, read with Section 120-
BIPC for the offences of corruption and bribery along with
criminal conspiracy. The names of the accused in this FIR are:
"(i) Mr Sudhir Parmar (the then Special Judge, CBI and ED,
Panchkula); (ii) Mr Ajay Parmar [nephew of Mr Sudhir Parmar
and Deputy Manager (Legal) in M3M Group]; (iii) Mr Roop
Bansal (promotor of M3M Group); and (iv) other unknown
persons."
3. Significantly, prior to this FIR, between the years 2018 and
2020, 13 FIRs were gotten registered by allottees of two
residential projects of the IREO Group, alleging illegalities on
the part of its management. On the strength of these FIRs, ED
recorded Enforcement Case Information Report No.
GNZO/10/2021 dated 15-6-2021 (hereinafter "the first ECIR")
in connection with the money laundering offences allegedly
committed by the IREO Group and Lalit Goyal, its Vice-
Chairman and Managing Director. Neither in the FIRs nor in
the first ECIR were M3M Group or the appellants herein
arrayed as the accused. Further, no allegations were levelled
against them therein. On 14-1-2022, ED filed Prosecution
Complaint No. 01/2022, titled "Enforcement Directorate v. Lalit
Goyal and others", against seven named accused, under Section
200CrPC read with Sections 44 and 45 PMLA. Notably, M3M
BBl
2025:JHHC:31170
Group and the appellants did not figure amongst those named
accused. The number of FIRs had also increased from 13 to 30,
as per this complaint. This case was numbered as
COMA/01/2022, titled "Enforcement Directorate v. Lalit Goyal
and others", and was pending in the Court of Sudhir Parmar,
Special Judge. At that stage, the Anti Corruption Bureau,
Panchkula, received information that Sudhir Parmar was
showing favouritism to Lalit Goyal, the owner of IREO Group,
and also to Roop Bansal and his brother, Basant Bansal, the
owners of M3M Group. This led to the registration of FIR No.
0006 dated 17-4-2023. On 12-5-2023, ED issued summons to
M3M India Pvt. Ltd., calling upon it to provide information and
documents pertaining to transactions with certain companies.
Thereafter, on 1-6-2023, ED raided the properties of M3M
Group and effected seizures of assets and bank accounts. Roop
Bansal was arrested by ED on 8-6-2023 apropos the first ECIR.
4. Apprehending that action would be taken against them also in
the context of the first ECIR, Pankaj Bansal and Basant Bansal
secured [Basant Bansal v. State (NCT of Delhi), (2023) 2 HCC
(Del) 700] , [Pankaj Bansal v. State (NCT of Delhi), 2023 SCC
OnLine Del 3590] interim protection from the Delhi High Court
in Bail Applications Nos. 2030 and 2031 of 2023. By separate
orders dated 9-6-2023 [Basant Bansal v. State (NCT of Delhi),
(2023) 2 HCC (Del) 700] passed therein, the Delhi High Court
noted that Pankaj Bansal and Basant Bansal had not been
named in the first ECIR and that ED had not yet been able to
implicate them in any of the scheduled offences under the 2002
Act. Further, the High Court noted that Pankaj Bansal had not
even been summoned by ED in that case. The High Court
accordingly granted them interim protection by way of
anticipatory bail, subject to conditions, till the next date of
hearing i.e. 5-7-2023. Special Leave Petitions (Crl.) Nos. 7384
and 7396 of 2023 were filed by ED assailing the orders dated 9-
6 2023 [Basant Bansal v. State (NCT of Delhi), (2023) 2 HCC
(Del) 700] , [Pankaj Bansal v. State (NCT of Delhi), 2023 SCC
OnLine Del 3590] , [Basant Bansal v. State (NCT of Delhi),
(2023) 2 HCC (Del) 700] before this Court and the same are
stated to be pending. 5. In the meanwhile, on the basis of FIR
No. 0006 dated 17-4-2023, ED recorded another ECIR viz.
BBl
2025:JHHC:31170
ECIR/GNZO/17/2023, on 13-6-2023 (hereinafter "the second
ECIR") against: (i) Mr Sudhir Parmar; (ii) Mr Ajay Parmar;
(iii) Mr Roop Bansal; and (iv) others who are named in the
FIR/unknown persons. 6. However, summons were issued by ED
to Pankaj Bansal and Basant Bansal on 13-6-2023 at 6.15 p.m.
in relation to the first ECIR, requiring them to appear before
ED on 14-6-2023 at 11.00 a.m. Though the copy of the summons
placed before this Court pertains to Pankaj Bansal alone, the
email dated 13-6-2023 of the Assistant Director of ED, bearing
the time 6.15 p.m., was addressed to both Pankaj Bansal and
Basant Bansal and required their compliance with the summons
on 14-6-2023 at 11 a.m. While Pankaj Bansal and Basant
Bansal were at the office of ED at Rajokri, New Delhi, in
compliance with these summons, Pankaj Bansal was served with
fresh summons at 4.52 p.m. on 14-6-2023, requiring him to be
present before another investigating officer at 5.00 p.m. on the
same day. This summons was in connection with the second
ECIR. There is lack of clarity as to when summons in relation to
the second ECIR were served on Basant Bansal. According to
ED, he was served the summons on 13-6 2023 itself and refused
to receive the same. However, it is an admitted fact that Basant
Bansal was also present at ED's office at Rajokri, New Delhi, on
14-6-2023 at 11.00 a.m. It is also not in dispute that, while he
was there, Basant Bansal was arrested at 6.00 p.m. on 14-6-
2023 and Pankaj Bansal was arrested at 10.30 p.m. on the same
day. These arrests, made in connection with the second ECIR,
were in exercise of power under Section 19(1) PMLA. The
arrested persons were then taken to Panchkula, Haryana, and
produced before the learned Vacation Judge/Additional
Sessions Judge, Panchkula. There, they were served with the
remand application filed by ED. 10. It was the specific case of
the father and son in their writ petitions before the High Court
that their arrest under the provisions of PMLA was a wanton
abuse of power/authority and an abuse of process by ED, apart
from being blatantly illegal and unconstitutional. They also
asserted that ED acted in violation of the safeguards provided in
Section 19 PMLA. In this milieu, they made the following
prayers: "In view of the facts and circumstances mentioned
above, it is, therefore, respectfully prayed that this Hon'ble
BBl
2025:JHHC:31170
Court may kindly be pleased to issue appropriate writ(s),
order(s) and/or direction(s) to: A. Read down and/or read into
as well as expound, deliberate upon and delineate the ambit,
sweep and scope of Section 19(1) PMLA in consonance with the
principles, inter alia, enunciated by the Hon'ble Supreme Court
in Vijay Madanlal Choudhary v. Union of India [Vijay
Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 : 2022
SCC OnLine SC 929 : (2022) 10 Scale 577] and hold that: (i)
The expression "material in possession" occurring therein must
be confined, circumscribed and limited to legally admissible
evidence of sterling quality and unimpeachable character on the
basis whereof "reasons to believe" could be recorded in writing
that the arrestee is "guilty" of the offence under Section 4
PMLA; (ii) The word "guilt" occurring therein would qualify a
higher yardstick than a mere suspicion and the learned Court at
the stage of remand is required to apply its judicial mind to the
grounds as well as necessity for arrest as, inter alia, held in
Arnesh Kumar v. State of Bihar [Arnesh Kumar v. State of
Bihar, (2014) 8 SCC 273 : (2014) 3 SCC (Cri) 449] and as
accorded imprimatur in Satender Kumar Antil v. CBI [Satender
Kumar Antil v. CBI, (2022) 10 SCC 51 : (2023) 1 SCC (Cri) 1] ;
(iii) The expression "communicate" occurring therein would
definitely entail physical communication and furnishing the
grounds of arrest to the arrestee in the context of the obligation
for "reason for such belief to be recorded in writing" read with
Rules 2(1)(g) and 2(1)(h) of the PMLA Rules, 2005 (the Arrest
Rules) which postulates the meaning of the word "order" to
include the grounds of such arrest."
69. The Hon'ble Apex Court in the aforesaid pretext has
laid down the proposition to communicate the reasons
for arrest in writing by making reference of word
'henceforth'. The Hon'ble Apex Court while considering
the particular case of said Pankaj Bansal has
considered the admitted position that the investigating
officer merely read out or permitted reading of the
BBl
2025:JHHC:31170
grounds of arrest of the appellants and left it at that,
which is also disputed by the appellants and hence, it
has been held that their arrest was not in keeping with
the provisions of Section 19(1) PMLA, 2002.
Accordingly, the appeals before the Hon'ble Apex Court
were allowed, setting aside the impugned orders passed
by High Court as well as the impugned arrest orders
and arrest memos along with the orders of remand
passed by the learned Vacation Judge/Additional
Sessions Judge, and all orders consequential thereto.
Accordingly, the appellants were directed to be released
forthwith. For ready reference, the relevant paragraph is
being quoted as under:
"39. We may also note that the language of Section 19
PMLA puts it beyond doubt that the authorised officer has
to record in writing the reasons for forming the belief that
the person proposed to be arrested is guilty of an offence
punishable under the 2002 Act. Section 19(2) requires the
authorised officer to forward a copy of the arrest order
along with the material in his possession, referred to in
Section 19(1), to the adjudicating authority in a sealed
envelope. Though it is not necessary for the arrested
person to be supplied with all the material that is
forwarded to the adjudicating authority under Section
19(2), he/she has a constitutional and statutory right to be
"informed" of the grounds of arrest, which are
compulsorily recorded in writing by the authorised officer
in keeping with the mandate of Section 19(1) PMLA. As
already noted hereinbefore, it seems that the mode of
informing this to the persons arrested is left to the option
of ED's authorised officers in different parts of the country
BBl
2025:JHHC:31170
i.e. to either furnish such grounds of arrest in writing or to
allow such grounds to be read by the arrested person or
be read over and explained to such person.
45. On the above analysis, to give true meaning and
purpose to the constitutional and the statutory mandate of
Section 19(1) PMLA of informing the arrested person of
the grounds of arrest, we hold that it would be necessary,
henceforth, that a copy of such written grounds of arrest is
furnished to the arrested person as a matter of course and
without exception. The decisions of the Delhi High Court
in Moin Akhtar Qureshi [Moin Akhtar Qureshi v. Union of
India, 2017 SCC OnLine Del 12108] and the Bombay
High Court in Chhagan Chandrakant Bhujbal [Chhagan
Chandrakant Bhujbal v. Union of India, 2016 SCC OnLine
Bom 9938 : (2017) 1 AIR Bom R (Cri) 929] , which hold
to the contrary, do not lay down the correct law. In the
case on hand, the admitted position is that ED's
investigating officer merely read out or permitted reading
of the grounds of arrest of the appellants and left it at that,
which is also disputed by the appellants. As this form of
communication is not found to be adequate to fulfil
compliance with the mandate of Article 22(1) of the
Constitution and Section 19(1) PMLA, we have no
hesitation in holding that their arrest was not in keeping
with the provisions of Section 19(1) PMLA. Further, as
already noted supra, the clandestine conduct of ED in
proceeding against the appellants, by recording the
second ECIR immediately after they secured interim
protection in relation to the first ECIR, does not commend
acceptance as it reeks of arbitrary exercise of power. In
effect, the arrest of the appellants and, in consequence,
their remand to the custody of ED and, thereafter, to
judicial custody, cannot be sustained.
46.The appeals are accordingly allowed, setting aside the
impugned orders [Pankaj Bansal v. Union of India, 2023
SCC OnLine P&H 2045] , [Pankaj Bansal v. Union of
India, 2023 SCC OnLine P&H 2028] passed by the
Division Bench of the Punjab and Haryana High Court as
well as the impugned arrest orders and arrest memos
BBl
2025:JHHC:31170
along with the orders of remand passed by the learned
Vacation Judge/Additional Sessions Judge, Panchkula,
and all orders consequential thereto.
47. The appellants shall be released forthwith unless their
incarceration is validly required in connection with any
other case."
70. Subsequent to the said judgment, the judgment has
come in the case of Ram Kishor Arora Vs. Directorate of
Enforcement, [2023 SCC OnLine SC 1682]. The Hon'ble
Apex Court while taking into consideration the judgment
passed by Vijay Madanlal Choudhary v. Union of India
(supra) has observed that the law laid down by the three-
Judges Bench in Vijay Madanlal Choudhary that Section
19(1) PMLA has a reasonable nexus with the purposes and
objects sought to be achieved by the PML Act and that the
said provision is also compliant with the mandate of Article
22(1) of the Constitution of India, any observation made or
any finding recorded by the Division Bench of lesser
number of Judges contrary to the said ratio laid down in
Vijay Madanlal Choudhary would be not in consonance
with the jurisprudential wisdom expounded by the
Constitution Benches. For ready reference, the relevant
paragraph is being quoted as under :
"16. In view of the aforestated proposition of law propounded
by the Constitution Benches, there remains no shadow of doubt
that the law laid down by the three-Judge Bench in Vijay
Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of
India, (2023) 12 SCC 1 : 2022 SCC OnLine SC 929] that
Section 19(1) PMLA has a reasonable nexus with the purposes
BBl
2025:JHHC:31170
and objects sought to be achieved by the PML Act and that the
said provision is also compliant with the mandate of Article
22(1) of the Constitution of India, any observation made or any
finding recorded by the Division Bench of lesser number of
Judges contrary to the said ratio laid down in Vijay Madanlal
Choudhary [Vijay Madanlal Choudhary v. Union of India,
(2023) 12 SCC 1 : 2022 SCC OnLine SC 929] would be not in
consonance with the jurisprudential wisdom expounded by the
Constitution Benches in cases referred above. The three-Judge
Bench in Vijay Madanlal Choudhary [Vijay Madanlal
Choudhary v. Union of India, (2023) 12 SCC 1 : 2022 SCC
OnLine SC 929] having already examined in detail the
constitutional validity of Section 19 PMLA on the touchstone of
Article 22(1) and upheld the same, it holds the field as on the
date".
71. Further, the Hon'ble Apex Court in the aforesaid
judgment while taking into consideration the judgment
passed in the case of Pankaj Bansal Vs. Union of India &
Ors (supra), come out with a view that since by way of
safeguard a duty is casted upon the officer concerned to
forward a copy of the order along with the material in his
possession to the adjudicating authority immediately after
the arrest of the person, and to take the person arrested to
the court concerned within 24 hours of the arrest, in our
opinion, the reasonably convenient or reasonably requisite
time to inform the arrestee about the grounds of his arrest
would be twenty-four hours of the arrest. However, the
Hon'ble Apex Court refused to invalidate the arrest of said
Ram Kishor Arora. For ready reference, the relevant
paragraph of the judgment is quoted as under:
BBl
2025:JHHC:31170
"21. In view of the above, the expression "as soon as may be"
contained in Section 19 PMLA is required to be construed as --
"as early as possible without avoidable delay" or "within
reasonably convenient" or "reasonably requisite" period of
time. Since by way of safeguard a duty is cast upon the officer
concerned to forward a copy of the order along with the
material in his possession to the adjudicating authority
immediately after the arrest of the person, and to take the
person arrested to the court concerned within 24 hours of the
arrest, in our opinion, the reasonably convenient or reasonably
requisite time to inform the arrestee about the grounds of his
arrest would be twenty-four hours of the arrest. 22. In Vijay
Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of
India, (2023) 12 SCC 1 : 2022 SCC OnLine SC 929] , it has
been categorically held that so long as the person has been
informed about the grounds of his arrest, that is sufficient
compliance with mandate of Article 22(1) of the Constitution. It
is also observed that the arrested person before being produced
before the Special Court within twenty four hours or for that
purposes of remand on each occasion, the Court is free to look
into the relevant records made available by the authority about
the involvement of the arrested person in the offence of money
laundering. Therefore, in our opinion the person arrested, if he
is informed or made aware orally about the grounds of arrest at
the time of his arrest and is furnished a written communication
about the grounds of arrest as soon as may be i.e. as early as
possible and within reasonably convenient and requisite time of
twenty-four hours of his arrest, that would be sufficient
compliance of not only Section 19 PMLA but also of Article
22(1) of the Constitution of India. 23. As discernible from the
judgment in Pankaj Bansal case [Pankaj Bansal v. Union of
India, (2024) 7 SCC 576] also noticing the inconsistent practice
being followed by the officers arresting the persons under
Section 19 PMLA, directed to furnish the grounds of arrest in
writing as a matter of course, "henceforth", meaning thereby
from the date of the pronouncement of the judgment. The very
use of the word "henceforth" implied that the said requirement
of furnishing grounds of arrest in writing to the arrested person
as soon as after his arrest was not mandatory or obligatory till
BBl
2025:JHHC:31170
the date of the said judgment. The submission of the learned
Senior Counsel Mr Singhvi for the appellant that the said
judgment was required to be given effect retrospectively cannot
be accepted when the judgment itself states that it would be
necessary "henceforth" that a copy of such written grounds of
arrest is furnished to the arrested person as a matter of course
and without exception. Hence, non-furnishing of grounds of
arrest in writing till the date of pronouncement of judgment in
Pankaj Bansal case [Pankaj Bansal v. Union of India, (2024) 7
SCC 576] could neither be held to be illegal nor the action of
the officer concerned in not furnishing the same in writing could
be faulted with. As such, the action of informing the person
arrested about the grounds of his arrest is a sufficient
compliance of Section 19 PMLA as also Article 22(1) of the
Constitution of India, as held in Vijay Madanlal [Vijay
Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 : 2022
SCC OnLine SC 929]."
72. Thereafter, the Hon'ble Apex Court has considered
the issue of Section 19(1) in the case of Prabir
Purkayastha Vs. State (NCT of Delhi) (supra) wherein the
Hon'ble Apex Court has passed the order of release of said
Prabir Purkayastha, the appellant in the said case, on the
ground that no reason said to be in writing was
communicated even though the law has been laid down in
the case of Pankaj Bansal Vs. Union of India & Ors
(supra).
73. So far as the fact of the said case is concerned, the
officers of PS Special Cell, Lodhi Colony, New Delhi carried
out extensive raids at the residential and official premises
of the appellant and the company, of which the appellant is
the Director in connection with FIR No. 224 of 2023 dated
BBl
2025:JHHC:31170
17-8-2023 registered at PS Special Cell, Lodhi Colony, New
Delhi for the offences punishable under Sections 13, 16,
17, 18, 22-C of the Unlawful Activities (Prevention) Act,
1967 read with Sections 153-A, 120-B of the Penal Code.
74. The appellant was arrested in connection with the
said FIR on 3-10-2023 vide arrest memo. Thereafter, the
appellant was presented in the court of the learned
Additional Sessions Judge-02, Patiala House Courts, New
Delhi on 4-10-2023, sometime before 6.00 a.m. which fact
is manifested from the remand order and the appellant was
remanded to seven days' police custody vide order dated 4-
10-2023. The proceedings of remand have been seriously
criticized as being manipulated by Shri Kapil Sibal, learned
Senior Counsel for the appellant and aspersions of
subsequent insertions in the remand order have been
made.
75. The appellant promptly questioned his arrest and
the police custody remand granted by the learned Remand
Judge vide order dated 4-10-2023 by preferring Criminal
Miscellaneous Case No. 7278 of 2023 in the High Court of
Delhi which stands rejected by the learned Single Judge of
the High Court of Delhi vide judgment dated 13-10-2023.
The said order is subjected to challenge by special leave
before the Hon'ble Apex Court.
BBl
2025:JHHC:31170
76. The Hon'ble Apex Court has taken into
consideration the ratio of the judgment rendered in the
case of Pankaj Bansal Vs. Union of India & Ors (supra).
The arrest of the said appellant was on 03.10.2023 but the
judgment rendered in the case of Pankaj Bansal Vs.
Union of India & Ors (supra) has been uploaded on
04.10.2023 and as such, the ground was taken not to give
any aid of judgment passed in the case of Pankaj Bansal
Vs. Union of India & Ors. (supra), even though, the
written communication regarding the ground of arrest of
the appellant has not been furnished but the Hon'ble Apex
Court has passed the order that merely because the
judgment in the case of Pankaj Bansal Vs. Union of India
& Ors (supra) has been uploaded on 04.10.2023 but the
said Prabir Purkayastha was arrested on 04.10.2023 while
the judgment passed in the case of Pankaj Bansal Vs.
Union of India & Ors (supra) was delivered on 03.10.2023
and as such the case of Prabir Purkayastha has come
within the ratio of judgment rendered in the case of Pankaj
Bansal Vs. Union of India & Ors (supra) and since, the
written communication was not there, hence, he was
directed to be released on bail, for ready reference, the
relevant paragraph is being quoted as under::
"29. Hence, we have no hesitation in reiterating that the
requirement to communicate the grounds of arrest or the
BBl
2025:JHHC:31170
grounds of detention in writing to a person arrested in
connection with an offence or a person placed under preventive
detention as provided under Articles 22(1) and 22(5) of the
Constitution of India is sacrosanct and cannot be breached
under any situation. Non-compliance of this constitutional
requirement and statutory mandate would lead to the custody or
the detention being rendered illegal, as the case may be.
30. Furthermore, the provisions of Article 22(1) have already
been interpreted by this Court in Pankaj Bansal [Pankaj Bansal
v. Union of India, (2024) 7 SCC 576] laying down beyond the
pale of doubt that the grounds of arrest must be communicated
in writing to the person arrested of an offence at the earliest.
Hence, the fervent plea of the learned ASG that there was no
requirement under law to communicate the grounds of arrest in
writing to the appellant-accused is noted to be rejected."
77. Again, in the case of Arvind Kejriwal Vs.
Directorate of Enforcement (supra) the view has been
taken for communication of reason of arrest and it has
been observed by the Hon'ble Apex Court that the written
"grounds of arrest", though a must, does not in itself satisfy
the compliance requirement. The authorized officer's
genuine belief and reasoning based on the evidence that
establishes the arrestee's guilt is also the legal necessity. As
the "reasons to believe" are accorded by the authorised
officer, the onus to establish satisfaction of the said
condition will be on the DoE and not on the arrestee. The
Hon'ble Apex Court while taking in to consideration the
judgment rendered by the Hon'ble Apex Court in Vijay
Madanlal Choudhary (supra) is a decision rendered by a
three Judge Bench, hence, after formulating the questions
BBl
2025:JHHC:31170
of law has referred the matter for consideration by a larger
Bench. For ready reference, the relevant paragraphs are
being quoted as under:
"11. Arrest under Section 19(1) of the PML Act may occur
prior to the filing of the prosecution complaint and before the
Special Judge takes cognizance.11 Till the prosecution
complaint is filed, there is no requirement to provide the
accused with a copy of the ECIR.12 The ECIR is not a public
document. Thus, to introduce checks and balances, Section
19(1) imposes safeguards to protect the rights and liberty of the
arrestee. This is in compliance with the mandate of Article 22(1)
of the Constitution of India. V. Senthil Balaji v. State similarly
states that the designated officer can only arrest once they
record "reasons to believe" in writing, that the person being
arrested is guilty of the offence punishable under the PML Act.
It is mandatory to record the "reasons to believe" to arrive at
the opinion that the arrestee is guilty of the offence, and to
furnish the reasons to the arrestee. This ensures an element of
fairness and accountability.
16. Recently, in Prabir Purkayastha v. State (NCT of Delhi), this
Court reiterated the aforesaid principles expounded in Pankaj
Bansal (supra). The said principles were applied to the pari
materia provisions of the Unlawful Activities (Prevention) Act,
1967. The Court explained that Section 19(1) of the PML Act is
meant to serve a higher purpose, and also to enforce the
mandate of Article 22(1) of the Constitution. The right to life
and personal liberty is sacrosanct, a fundamental right
guaranteed under Article 21 and protected by Articles 20 and 22
of the Constitution. Reference was made to the observations of
this Court in Roy V.D. v. State of Kerala17 that the right to be
informed about the grounds of arrest flows from Article 22(1) of
the Constitution and any infringement of this fundamental right
vitiates the process of arrest and remand. The fact that the
chargesheet has been filed in the matter would not validate the
otherwise illegality and unconstitutionality committed at the
time of arrest and grant of remand custody of the accused.
Reference is also made to the principle behind Article 22(5) of
BBl
2025:JHHC:31170
the Constitution. Thus, this Court held that not complying with
the constitutional mandate under Article 22(1) and the statutory
mandate of the UAPA, on the requirement to communicate
grounds of arrest or grounds of detention, would lead to the
custody or detention being rendered illegal.
28. Providing the written "grounds of arrest", though a must,
does not in itself satisfy the compliance requirement. The
authorized officer's genuine belief and reasoning based on the
evidence that establishes the arrestee's guilt is also the legal
necessity. As the "reasons to believe" are accorded by the
authorised officer, the onus to establish satisfaction of the said
condition will be on the DoE and not on the arrestee."
78. Further, the Hon'ble Apex Court in the case of V.
Senthil Balaji v. Director, 2024 SCC OnLine SC 2626
has again considered the issue of Section 19(1) of the Act
2002. The factual aspect of the case is like that between
2011 and 2016; the appellant was holding the post of
Transport Minister in the Government of Tamil Nadu.
Broadly, the allegation against the appellant is that while
discharging his duties as a Minister, in connivance with his
personal assistant and his brother, he collected large
amounts by promising job opportunities to several persons
in various positions in the Transport Department. This led
to the registering of three First Information Reports against
the appellant and others. The said First Information
Reports are FIR no. 441 of 2015 dated 29th October 2015
(CC Nos. 22 and 24 of 2021), FIR No. 298 of 2017
registered on 9th September 2017 (CC No. 19 of 2020) and
FIR no. 344 dated 13th August 2018 (CC No. 25 of 2020).
BBl
2025:JHHC:31170
79. In the first FIR, six charge sheets have been filed.
More than 2000 accused have been named in the charge
sheets. 550 witnesses have been named. In the case of the
second FIR, there are 14 accused named in the
chargesheet. In connection with this FIR, 24 witnesses have
been cited. In the third FIR, 24 accused have been named
in the charge sheet and 50 prosecution witnesses have
been cited. The offences alleged in the aforementioned
crimes are mainly under Sections 120B, 419, 420, 467 and
471 of the Penal Code, 1860 and Sections 7, 12, 13(2) read
with Section 13(1)(d) of the Prevention of Corruption Act,
1988. Section 34 of the Penal Code, 1860 has been
invoked.
80. These offences are scheduled offences within the
meaning of Section 2(y) of the PMLA. Therefore, relying on
the final reports filed in aforementioned scheduled offences,
for an offence of money laundering under Section 3 of the
PMLA punishable under Section 4, the Enforcement
Directorate (ED) registered an Enforcement Case
Information Report (for short ―ECIR‖) bearing ECIR No.
MDSZO/21/2021 on 29th July 2021.
81. Consequently, the appellant was arrested on 14th
June 2023 in connection with the said ECIR and was
remanded to judicial custody. A complaint was filed for the
offence under Section 3 of the PMLA Act, which is
BBl
2025:JHHC:31170
punishable under Section 4, on 12th August 2023. The
appellant is the only accused named in the complaint.
Cognizance has been taken based on the complaint by the
Special Court under the PMLA. The scheduled offences
cases have been transferred to the learned Assistant
Sessions Judge, Additional Special Court for Trial of
Criminal Cases related to Elected Members of Parliament
and Members of Legislative Assembly of Tamil Nadu
(Special MPMLA Court), Chennai.
82. The Hon'ble Apex Court while taking note of the
settled principle that the stringent provisions regarding the
grant of bail, such as Section 45(1)(iii) of the PMLA, cannot
become a tool which can be used to incarcerate the accused
without trial for an unreasonably long time has allowed the
appeal and direction has been passed that the appellant
shall be enlarged on bail till the final disposal of the case.
83. Consequent to the aforesaid judgments, recently the
Hon'ble Apex Court has expressed its view in the case of
Vihaan Kumar v. State of Haryana (supra) wherein the
judgment and order dated 30th August 2024 passed by the
learned Single Judge of Punjab and Haryana High Court
has been assailed. The appellant of the said case was
arrested in connection with first information report no. 121
of 2023 dated 25th March 2023 registered for the offences
under Sections 409, 420, 467, 468 and 471 read with
BBl
2025:JHHC:31170
Section 120 B of the Indian Penal Code, 1860 (in short
'IPC'). According to the appellant's case, he was arrested on
10th June 2024 at about 10.30 a.m. at his office premises
on the 3rd-5th floor of HUDA City Centre, Gurugram,
Haryana. He was taken to DLF Police Station, Section 29,
Gurugram. He was produced before the learned Judicial
Magistrate (in charge) at Gurgaon on 11th June 2024 at
3.30 p.m.
84. It had been contended that there was a violation of
Article 22(2) of the Constitution and Section 57 of the Code
of Criminal Procedure Code, 1973 (for short, Cr.P.C.'). The
allegation is that neither in the remand report nor in the
order dated 11th June 2024 passed by the learned
Magistrate was the time of arrest mentioned. The FIR was
registered at the instance of the 2nd respondent.
85. Further, in the aforesaid case a vital issue was
emerged when the learned counsel appearing for the
appellant produced photographs which showed that while
he was admitted to the hospital, he was handcuffed and
chained to the hospital bed. Therefore, a notice was issued
on 4th October 2024 to the Medical Superintendent of
PGIMS, calling upon him to file an affidavit stating whether
the appellant was handcuffed and chained to the hospital
bed. The order dated 21st October 2024 records the
admission of the Medical Superintendent of PGIMS that
BBl
2025:JHHC:31170
when the appellant was admitted to the hospital, he was
handcuffed and chained to the bed.
86. The Hon'ble Apex Court while taking in to
consideration the mandate of Article 22 of the Constitution
of India has held that the requirement of informing the
person arrested of the grounds of arrest is not a formality
but a mandatory constitutional requirement. Article 22 is
included in Part III of the Constitution under the heading of
Fundamental Rights. Thus, it is the fundamental right of
every person arrested and detained in custody to be
informed of the grounds of arrest as soon as possible. The
Hon'ble Apex Court has further observed as under:
"15. We have already referred to what is held in paragraphs 42
and 43 of the decision in the case of Pankaj Bansal1. This Court
has suggested that the proper and ideal course of
communicating the grounds of arrest is to provide grounds of
arrest in writing. Obviously, before a police officer
communicates the grounds of arrest, the grounds of arrest have
to be formulated. Therefore, there is no harm if the grounds of
arrest are communicated in writing. Although there is no
requirement to communicate the grounds of arrest in writing,
what is stated in paragraphs 42 and 43 of the decision in the
case of Pankaj Bansal1 are suggestions that merit
consideration. We are aware that in every case, it may not be
practicable to implement what is suggested. If the course, as
suggested, is followed, the controversy about the non-
compliance will not arise at all. The police have to balance the
rights of a person arrested with the interests of the society.
Therefore, the police should always scrupulously comply with
the requirements of Article 22."
BBl
2025:JHHC:31170
87. It is, thus, evident that in all these judgments the
issue at the time of arrest was the primary factor, which
was questioned before the Hon'ble Apex Court and the
same has been dealt with by the Hon'ble Apex Court in
those judgments.
88. It is, thus, evident from the cumulative
consideration of the judgment rendered by the Hon'ble
Apex Court, as referred above, that the law under statutory
provision as contained under Section 19(1) of the PML Act,
2002 is that the reason/ground is to be communicated to
the person concerned then only the arrest would be said to
be valid.
89. This Court is conscious that in any nature of arrest,
the mandatory requirement is to be fulfilled. Herein, the
mandatory requirement as per Article 19(1) of the PML Act,
2002 coupled with the judgment as referred hereinabove by
laying down the ratio to communicate the "grounds for
arrest" and "reason to believe" in writing and as such this
Court has to consider as to whether the statutory command
in the facts and circumstances of the present case has been
followed or not, if yes, then the arrest cannot be held to be
invalid and if no, then certainly the arrest would be held to
be invalid.
90. Now, adverting to the factual aspect of the present
case and on consideration of the submissions advanced on
BBl
2025:JHHC:31170
behalf of petitioner, this Court has gone through the record,
particularly, Annexure-2 and 3 appended with the instant
petition/application, wherefrom, it is evident that petitioner
was arrested on 08.05.2025 and thereafter, he has been
produced forthwith before the Court within 24 hours for
remand. From Annexure-3, it appears that arrest of the
petitioner was made on 08.05.2025 under Section 19 of the
Act 2002 after recording detail "reasons to believe" based
on material which indicates the petitioner's involvement in
the alleged crime.
91. It is evident from Annexure-2 that the search
conducted on 08.05.2025 under Section 17 of the PMLA at
the premises of the Petitioner led to the recovery of
incriminating material including unaccounted cash and
digital evidence in the form of electronic devices. The search
was duly recorded in a Panchnama, and the Petitioner was
also summoned under Section 50 of PMLA, during which
his statement was recorded.
92. It is further evident from Annexure-3 that the
Petitioner was arrested on the same day after the
Authorized Officer recorded detailed "Reasons to Believe"
under Section 19(1) of PMLA, based on credible material
showing his active role in generating and layering proceeds
of crime.
BBl
2025:JHHC:31170
93. So far as the contention of the petitioner that the
ground of arrest and reason to believe were similar or
vague, which appears to be misplaced because from
perusal of Annexure-3 wherein both the documents have
been annexed, wherefrom, it is evident that a clear
distinction was maintained between the "Reasons to
Believe" and the "grounds of arrest" and both were supplied
to the petitioner satisfying the statutory mandate and the
safeguards envisaged under article 22(1) of the Constitution
of India. Further, at paragraph-15 of the instant petition,
the petitioner himself admitted the supply of all documents
like grounds of arrest and reasons to believe.
94. Further, the Petitioner was promptly produced
before the Ld. Special Court, PMLA, Ranchi within 24
hours, as mandated under Section 19(3) of the Act.
Subsequently, a well-reasoned remand order was passed
and even custody was granted upon an application made
by the Opposite Party, demonstrating full judicial
application of mind and negating the plea of arbitrariness.
95. Thus, from the aforesaid, it is evident that the
mandate as rendered by the Hon'ble Apex Court in the case
of Arvind Kejriwal v. Directorate of Enforcement,
(supra) and Pankaj Bansal v. Union of India, (supra) is
fully complied with in the facts of the present case. The said
decisions reinforce the requirement for proper application
BBl
2025:JHHC:31170
of mind, existence of reasons, and communication of
grounds, all of which were duly complied with in the
present case. Further, the Hon'ble Supreme Court in Vijay
Madanlal Choudhary v. Union of India, (supra) has
clearly laid down that once reasons to believe are recorded
on the basis of material, the scope of judicial review at the
pre-trial stage, is limited.
96. Further, the submission of the Petitioner that he
was never previously summoned is factually incorrect. He
was summoned under Section 50 PMLA on 08.05.2025 and
his statement was recorded, which would be evident from
Annexure-2 of the petition. Further, the contention of the
Petitioner that the reasons to believe and grounds of arrest
are identical, is factually misconceived and legally
untenable as both the "Reasons to Believe" and "Grounds of
Arrest" were recorded separately, in writing, and were duly
communicated to the Petitioner at the time of arrest, which
would be evident from Annexure-3 of the petition.
97. It requires to refer herein that the arrest under
Section 19(1) of PMLA does not require compliance with
Section 41 Cr.P.C., since, later governs police arrests under
the Code of Criminal Procedure. PMLA being a special law,
the provisions of Section 19(1) of PMLA operate
independently, with in-built safeguards including the
requirement of written reasons to believe, furnishing of
BBl
2025:JHHC:31170
grounds of arrest and production before the Ld. Special
Court within 24 hours.
98. Thus, on the basis of the discussion made
hereinabove, this Court is of the view that contention of the
petitioner that his arrest was made without any substantive
material, is wholly untenable and contrary to the facts and
record of the case. The procedural and substantive
requirements for arrest have been fully complied with. The
judicial remand granted by the Ld. Special Court further
confirms the legality and necessity of the arrest.
99. Further, the arrest of the Petitioner was made by an
officer duly authorised under the provisions of the PMLA
and in accordance with the statutory requirements laid
down under Section 19 of the said Act. As per the averment
made in the counter affidavit, the officer effecting the
arrest, namely, Shri Rajendra Singh, Assistant Director, is
a designated and empowered officer under Section 19(1)
PMLA, hence, the arrest is not vitiated on this ground.
100. It appears from the record that the Arresting Officer,
in the present case, did in fact form reasons to believe in
writing based on the material in his possession, and such
reasons were separately recorded and communicated to the
Petitioner at the time of arrest, along with a copy of the
Grounds of Arrest. This procedure fully complied with the
mandate of V. Senthil Balaji (supra) wherein the Hon'ble
BBl
2025:JHHC:31170
Supreme Court reiterated that the authorised officer must
assess material, form a belief and communicate the
grounds of arrest which was done in the instant case.
101. Further, the Petitioner's contention that the
Arresting Officer must himself have physically participated
in the search proceedings or have personally gathered all
material is not a legal requirement under PMLA.
102. It requires to refer herein that Section 19(1) of PMLA
only mandates that the authorised officer must form a
reason to believe, on the basis of material in his possession,
which may include material collected by subordinate
officers during search and investigation and placed before
him for consideration. This does not mean the arresting
officer must be physically present at every preceding
investigative step. Such a literal and restrictive
interpretation finds no support in law and is contrary to the
operational realities of multi-agency investigations. Further,
there is no requirement under Section 19(1) of PMLA or the
relevant rules that the authorisation to arrest in a
particular ECIR must be separately annexed or filed before
the Court. The arrest cannot be declared invalid merely
because the Petitioner seeks production of a document that
has no bearing on the substantive legality of arrest.
103. In Vijay Madanlal Choudhary v. Union of India,
(supra), the Hon'ble Supreme Court held that high-ranking
BBl
2025:JHHC:31170
officers such as Assistant Directors are empowered to
arrest under Section 19(1), provided they form the required
belief on the basis of material in their possession. There is
no statutory requirement that such material must be
collected only by them personally.
104. It is evident from record that at the time of arrest,
the Petitioner/Accused was not only informed of the
grounds for his arrest but was also provided with the
detailed "Reasons to Believe", the "Grounds of Arrest", and
the "Arrest Order" in writing which is conclusively
evidenced by the Petitioner's own sign, handwritten
acknowledgment on the document itself, confirming he
received the 'Reasons to Believe' and other arrest
documents in writing and in original at the time of his
arrest. A true copy of the "Reasons to believe" u/s 19(1) of
the PMLA for arrest of present petitioner and "Grounds of
Arrest" is also being annexed herewith by the respondent
by filing interlocutory application. True Copies of the said
'Reasons to Believe' and 'Grounds of Arrest' are annexed
herewith as Annexure R-2 and R-3 respectively, wherefrom,
it is evident that the Petitioner/Accused, Amit Agarwal, had
personally acknowledged the receipt of the said documents
in his own handwriting on the last page of the 'Reasons to
Believe document itself. The handwritten acknowledgment
by the Petitioner reads as follows:
BBl
2025:JHHC:31170
"I have received ground of arrest, reason to
belief and arrest order, in writing in
original." This acknowledgment is duly
signed by the Petitioner and dated.
105. Thus, the aforesaid acknowledgment by the
Petitioner himself irrefutably established that there has
been complete compliance with the settled principles of law
laid down by the Hon'ble Apex Court.
106. Thus, on the basis of the discussions made
hereinabove, it is the considered view of this Court that
herein the arrest of the Petitioner is valid both procedurally
and substantively and the officer effecting arrest was
authorised, possessed material in his custody, formed a
reasoned belief based on that material, recorded the same
in writing, informed the Petitioner of the grounds of arrest,
and forwarded all material to the Adjudicating Authority,
thereby satisfying all legal requirements under the PMLA
and the binding judgments of the Hon'ble Supreme Court,
therefore, the contention of the learned counsel for the
petitioner about legality of the arrest, is hereby negated.
Issue of culpability of the present petitioner:
107. It is evident from the record that the Directorate
General of GST Intelligence (in short DGGI), Jamshedpur
filed three complaint cases i.e. Complaint Case No.
678/2024 dt. 29.04.2024 against Shiva Kumar Deora,
Complaint Case No. 1280/2024 dt. 04.06.2024 against
BBl
2025:JHHC:31170
Sumit Gupta and Complaint Case No. 1281/2024 dt.
04.06.2024 against Amit Gupta u/s 132 of the GST Act r/w
section 20 of the Integrated GST Act, 2017 r/w section 34,
120A, 193, 195A, 201, 203, 204, 406, 409, 420, 465, 467,
468, 471 of IPC in the court of Economic Offices,
Jamshedpur. Since u/s 420, 467 and 471 of the IPC, above
stated complaints filed by the DGGI, Jamshedpur are
scheduled offences as per paragraph 1 Part A of the
schedule provided under PMLA 2002, the ECIR No.
RNZO/18/2024 was recorded on 23.09.2024 for
conducting an investigation under PMLA, 2002.
108. As per aforesaid three complaint cases, it is revealed
that a syndicate is operational in Jharkhand, West Bengal,
Delhi and other states of the country. Syndicate is indulged
in creation, operation and management of fake companies /
firms for passing on ineligible ITC (Input Tax Credit) by
issuing fake GST bills, without actually delivering the
related goods and services, and the persons namely Shiva
Kumar Deora, Sumit Kumar Gupta and Amit Kumar Gupta
were a part of the said syndicate who were knowingly a
party with each other and or directly involved in illegal
activities of creation of fake companies / firms in the name
of various dummy directors/ proprietors in order to avail
and pass on ITC to several end beneficiaries in lieu of
money, which are proceeds of crime.
BBl
2025:JHHC:31170
109. Further, it has been transpired from the complaints
that several bogus GST invoices have been generated in
Delhi and have traveled to Jharkhand via West Bengal in
three to four layers. A portion of these bogus ITCs have also
been transferred to other States such a Tamil Nadu,
Telangana, Andhra Pradesh, Maharashtra and Odisha and
bogus ITC claims have also been taken on the basis of the
said fake invoices.
110. As per aforesaid complaint cases, accused Shiva
Kumar Deora is the mastermind behind the said fraud
committed of availing ITC on the strength of bogus invoices,
by way of creation of multiple companies/firms in the name
of innocent persons. They hired innocent and needy
persons in the name of job at the numeration of Rs.
10,000/- to 15,000/- per month and they were not required
attend the office daily. Instead, they were asked to provide
OTP and PIN, whenever required by them. Subsequently,
fake firms and companies were floated in the name of those
innocent needy persons after using their identity,
documents, without their knowledge or consent.
111. Further, it is also revealed that Sumit Kumar
Gupta, the accomplice of Shiva Kumar Deora worked as an
office staff member on his instructions for creating DSCs,
rent agreements for various firms and companies for which,
he was initially paid a monthly salary of Rs. 30,000/-.
BBl
2025:JHHC:31170
Shiva Kumar Deora and his accomplices, namely, Amit
Kumar Gupta and Sumit Kumar Gupta are beneficial
owners of total 135 shell companies/firms which are floated
in names of various dummy directors and by these firms
they availing fake ITC to the tune of Rs. 750 crores (Approx)
and passed them to several end beneficiaries thereby
causing significant loss to the government exchequer.
112. It has further been alleged in the aforesaid
complaints as filed by DGGI, Jamshedpur, that an FIR was
registered against Tutui Debnath, Sumi Shaw and present
petitioner Amit Agarwal @ Vicky Bhalotia.
113. It has been alleged that the present petitioner is
also one of the accomplices of main mastermind Shiva
Kumar Deora who also works on similar modus in availing
fake ITC on strength of bogus invoices. In this regard FIR
NO. 98/2022 u/s 420, 406, 120BV of the IPC registered at
Bowbazar Police Station, Kolkata against petitioner in
relation to the matter pertaining to availing fake ITC to the
tune of Rs. 5,05,91,296/-.
114. It has been stated that Petitioner is one of the
directors of Greentech Steel Private Limited which are
indulged in claiming ineligible ITC on strength of bogus
invoices without actually delivering the goods and services.
Shiva Kumar Deora and present petitioner are also
common directors / proprietors of various firms.
BBl
2025:JHHC:31170
115. From the scrutiny of the bank accounts maintained
in the name of TE Udhyog Private Ltd., it is revealed that
Rs. 76,98,500/- have been debited to accused Amit Gupta
on various occasions. It is further revealed that Amit Gupta
is one of the former directors in the said company namely
TE Udhyog Pvt. Ltd. Further, several transactions have
been identified between the entities beneficially owned by
Shiva Kumar Deora and Amit Gupta with the present
petitioner through his ICICI Bank Account.
116. Thus, it has been stated that there is a nexus
between Shiva Kumar Deora and Amit Gupta with present
petitioner in illegal claiming of fake ITCs through fake
firms/companies.
117. Form scrutiny of the HDFC Bank Account no.
50100055793602 maintained in the name of petitioner, it
is revealed that a huge amount of Rs. 16,64,74,760/- has
been credited during the period from 28.10.2016 to
02.02.2025, out of which Rs. 3,41,60,151/- have been
credited from the bank account of Greentech Steel
Enterprises during the period 01.10.2020 to 17.12.2024
and Rs. 4,49,54,750/- have been debited from the said
Greentech Steel Enterprises during the period from
03.04.2021 to 16.11.2024.
118. Further, Rs. 3,24,92,300/- and Rs. 2,54,00,000/-
have been credited and debited from Greentech Minerals
BBl
2025:JHHC:31170
Pvt. Ltd during the period from 28.10.2021 to 21.01.2025
and 06.10.2020 to 15.03.2024 respectively.
119. Sum of Rs. 98,10,900/- and Rs. 85,00,000/- have
been credited and debited from Bizzare Commercial Pvt. Ltd
during the period from 26.11.2021 to 08.05.2023 and
08.10.2021 to 12.01.2022, respectively. Further, the above
stated entities have been prosecuted in the above stated
complaints filed by the DGGI.
120. Thus, it is established that while the above stated
entities are not in business, the bank accounts of the said
entities have been used by petitioner for layering and
deriving the proceeds of crime generated out of illegal
activities of fraudulently claiming ITC on the strength of
bogus invoices. Thus, it is established that the petitioner
was knowingly indulged in processes and activities of
money laundering and has caused a loss of Rs. 15.95
crores to the government exchequer through the
aforementioned illegal activities.
121. The Petitioner has been arrested for the offence u/s
3 PML Act punishable u/s 4 of the PML Act on 08.05.2025,
hence this petition.
122. Learned counsel for the petitioner has submitted
that the allegation leveled against the present petitioner
cannot be said to attract the ingredient of Section 3 of PML
Act, 2002.
BBl
2025:JHHC:31170
123. While on the other hand, the learned counsel
appearing for the Opp. Party-ED has submitted by referring
to various paragraphs of prosecution complaint that the
offence is very much available attracting the offence under
provisions of PML Act, 2002.
124. This Court, in order to appreciate the rival
submission, is of the view that various paragraphs of
prosecution complaint upon which the reliance has been
placed on behalf of both the parties, needs to be referred
herein so as to come to the conclusion, "as to whether the
parameter as fixed under Section 45 (i) and (ii) of the Act
2002, is being fulfilled in order to reach to the conclusion
that it is a fit case where regular bail is to be granted or
not".
125. For ready reference, the relevant paragraphs of the
prosecution complaint are being quoted as under:
A. The Criminal Conspiracy & The Syndicat:
Shri Amit Agarwal @ Vicky Bhalotia (Accused-4): A
key local operative and mastermind based in
Jamshedpur, who controlled several shell firms and
facilitated the syndicate by providing his own properties
for the registration of these bogus firms.
C. Orchestrated Control and Management by the
Syndicate Masterminds:
Shri Amit Agarwal @ Vicky Bhalotia (Accused-4) acted
as a key local operative and mastermind of the
syndicate based in Jamshedpur. He directly controlled
several shell firms, including M/s Aurorus Metals Pvt.
BBl
2025:JHHC:31170
Ltd. and M/s Bizzare Commercial Pvt Ltd., using
dummy directors to whom he made monthly payments.
He also facilitated the syndicate by providing his own
property for the registration of these bogus firms.
WhatsApp chats recovered during the DGGI
investigation indicated, his direct involvement in giving
operational instructions and managing GST-related
deceptions. He was linked to fake IIC availment of
approximately 48.19 Crores through 9 firms he directly
controlled, and further investigation has revealed his
deep nexus with Shiva Kumar Deora and Amit Gupta in
this criminal enterprise
3.3 Amount involved under PMLA
3. Furthermore, the investigation has identified that the
sub-syndicate controlled by Amit Agarwal @ Vicky
Bhalotia (Accused-4) in Jamshedpur, through 9 firms
under his direct or indirect control, availed irregular and
inadmissible GST ITC to the tune of approximately
₹48.19 Crores. This amount is part of the larger criminal
conspiracy and also constitutes proceeds of crime.
9. BRIEF DETAILS OF PERSONS EXAMINED U/S. 50
(2) & (3) OF PMLA ALONG WITH OPPORTUNITIES
ALLOWED TO ACCUSED TO DISCHARGE THE
BURDEN OF PROOF AS STIPULATED U/S. 24 OF
PMLA:
A statement of the accursed persons (master
minds)
9.4 Statement of Shri Amit Agarwal @ Vicky
Bhalotia (Accused-4) (RUD-14 and 22): In his
statements recorded on 08.05.2025, 17.05.2025,
18.05.2025, 19.05.2025 and 20.05.2025 the accused
Amit Agarwal confessed to his deep involvement in the
GST fraud as the head of the Jamshedpur operations.
He admitted to establishing and controlling multiple
shell firms, using individuals like Ritesh Kumar as
dummy directors on a monthly salary. He gave a
BBl
2025:JHHC:31170
detailed confession of the two primary modes of the
fraud: generating fake bills for goods sourced from
unregistered vendors and generating entirely bogus bills
where funds were returned via hawala networks after
deducting commission. He explicitly named the
'Angadias' used by the syndicate. He admitted to
receiving bogus bills on a commission basis from entities
controlled by Shiva Kumar Deora and Amit Gupta. He
was unable to explain huge credits of over 115.40 crores
in his HDFC bank account from various shell entities,
thus admitting to his role in the laundering of proceeds
of crime.
B. Statement of dummy directors / employees and
other persons
9.5 Statement of Shri Dipesh Kejriwal (RUD- 23):
In his statements recorded on 02.06.2025 and
11.06.2025, Shri Dipesh Kejriwal, an accountant for
the syndicate, provided a detailed insider account of
the entire conspiracy. He confirmed being hired by
Shiva Kumar Deora (Accused-1) and Amit Kumar
Gupta (Accused-3) and being made a director in shell
companies like M/s Lambodar Traders Pvt. Ltd. and
M/s Lambodar Iron Pvt. Ltd. He confessed to
investing approximately 240 lakhs with the syndicate
on the promise of high returns. Crucially, he stated
that after the arrest of Shiva Kumar Deora, Amit
Gupta instructed him to destroy his phone and
abscond for a few days to evade investigation. He
further revealed that Shiva Kumar Deora later
pressured and threatened him to sign a false affidavit
contradicting his statement given to DGGI. His
testimony corroborates the modus operandi, the roles
of the masterminds, and their attempts to tamper
with evidence and witnesses.
9.6 Statement of Smt. Anindita Banerjee
(recorded on 04.06.2025) (RUD-27)
BBl
2025:JHHC:31170
Smt. Anindita Banerjee, a graduate, stated that
following her husband's death in 2017, she was in a
precarious financial situation. She was recruited by
Shiva Kumar Deora (Accused-1) and Amit Gupta
(Accused-3) for a purported work-from-home job with
a monthly salary of Rs.12,500. She stated that she
was made a director in shell companies like M/s RNR
Metal and Steel Private Limited and M/s SBAG Metal
and Iron Private Limited entirely without her
knowledge, a fact she only discovered after Shiva
Kumar Deora's arrest by DGGI in February 2024. She
categorically stated that the accused misused her
personal KYC documents, along with those of her
children (Panchadeep Nag Choudhury and Nijhum
Nag Chowdhury), to create this web of entities. She
vehemently denied any knowledge of the fraudulent
activities, including the generation of fake invoices or
the illegal passing of ITC. Upon discovering the fraud,
she filed a formal complaint with the Kolkata Police,
corroborating her claim of being a victim of identity
theft.
9.7 Statement of Ms. Nijhum Nag Chowdhury
(recorded on 54.06.2025) (RUD-24):
Ms. Nijhum Nag Chowdhury stated that she was
introduced to Shiva Kumar Deora (Accused-1) and
Amit Gupta (Accused-3) in 2019 for a part-time job
with a salary of 15,000 per month. She was unaware
that she had been made a Director/Proprietor in
entities like M/s Sweko Enterprise (OPC) Pvt. Ltd. and
M/s Modicum Enterprise (OPC) Pvt. Ltd. until she
received summons from tax authorities. She asserted
that the accused misused her personal documents
and those of her family members. She confessed that
Sumit Gupta frequently contacted her for OTPs for
"office related work," which she provided in good faith
Crucially, she stated that Shiva Kumar Deora
(Accursed-1) threatened her, warning her not to
BBl
2025:JHHC:31170
cooperate with the DGGI investigation, which
establishes his role in witness intimidation.
11.6 Evidence Establishing the Nexus of the
Amit Agarwal Sub-Syndicate
A. The investigation has established that Accused No.
4, Amit Agarwal @ vicky Bhalotia, is a key
conspirator with a history of orchestrating CST fraud.
His criminal antecedents are evidenced by multiple
cases, including an FIR by the Durgapur CID and a
separate complaint (No. 5760 of 2023) by the DGGI,
Jamshedpur. Furthermore, an FIR (No. 98/2022) was
registered against him at PS Bowbazar Kolkata under
sections 420/406/120B of the IPC, for availing
fraudulent ITC to the tune of Rs. 5,05,91,296/- This
pattern of behaviour establishes his expertise and
intent in committing large-scale financial fraud.
B. In the present case, Amit Agarwal operated a
parallel sub-syndicate based in Jamshedpur. He
personally managed and controlled at least nine shell
companies, through which he fraudulently generated
and availed irregular and inadmissible GST ITC
amounting to Rs.48.19 crores on the strength of bogus
invoices, without any corresponding delivery of goods
or services.
C. While running his own operation, this sub-
syndicate was deeply intertwined with the main
syndicate controlled by Shiva Kumar Deora and Amit
Kumar Gupta. The nexus is established through clear
operational and financial linkages;
Operational Nexus: The syndicates share a common
pool of dummy directors. For instance, individuals like
Sumi Shaw were found to be common directors in
firms controlled by both Shiva Kumar Deora and Amit
Agarwal, proving a coordinated strategy and shared
control over the fraudulent network.
BBl
2025:JHHC:31170
Financial Nexus: A two-way flow of illicit funds has
been identified.
Funds Flowing from Agarwal's Entity: The bank
account of M/s TE Udhyog Private Ltd. (IndusInd
Bank A/C No.250023121980), a company where
Amit Agarwal was a director, reveals fund transfers
totaling Rs.76,98,500/- to Amit Kumar Gupta, the
main syndicate's financial manager.
Funds Flowing into Agarwal's Account: Scrutiny of
Amit Agarwal's personal HDFC Bank Account
(No.50100055793602) shows it was used as a
primary conduit for laundering proceeds of crime,
receiving staggering credits of Rs.16,64,74,760/-
between 2016 and 2025. A significant portion of
these funds originated from shell entities controlled
by the main syndicate, including M/s Greentech Steel
Enterprises, M/s Greentech Minerals Pvt Ltd, and
M/s Bizzare Commercial Pvt Ltd.
The circular movement of funds from known shell
companies through his personal account, as detailed
in the table below, irrefutably proves that Amit
Agarwal @ Vicky Bhalotia was not an independent
operator but a key player in the larger conspiracy,
laundering funds and availing fraudulent ITC from
the entities controlled by Shiva Kumar Deora and
others.
11.7 evidence from unexplained cash deposits
D. Shri Amit Agarwal @ Vicky Bhalotia: - The
accused Amit Agarwal Vicky Bhalotia also had
deposits amounting to Rs. 40.20 Lakhs made in four
separate bank accounts held in ICICI Bank, Punjab
National Bank and HDFC Bank between the period of
2010 to 2021.
12 SPECIFIC ROLE OF THE ACCUSED PERSONS
IN OFFENCE OF MONEY LAUNDERING-
BBl
2025:JHHC:31170
SHRI AMIT AGARWAL ALIAS VICKY BHALOTIA
(ACCUSED NO. 4):
Investigation has established that Shri Amit Agarwal
@ Vicky Bhalotia was a key mastermind in the
criminal conspiracy, operating as the head of the
syndicate's fraudulent activities in Jamshedpur,
Jharkhand. He was directly involved in creating and
managing his own network of shell entities,
generating substantial proceeds of crime, and
laundering these funds in close coordination with the
other masterminds. His actions demonstrate a clear
and deliberate commission of the offence of money
laundering under Section 3 of the PMLA, 2002.
A. Commission of Offence of Money Laundering under
Section 3 of PMLA, 2002
Shri Amit Agarwal, directly and indirectly, indulged,
knowingly assisted, and was knowingly a party to
and actually involved in the following processes and
activities connected with the proceeds of crime:
1. Generation, Acquisition, and Possession of
Proceeds of Crime:
Generation & Acquisition: He established and
controlled a network of at least nine shell companies,
including M/s Greentech Steel Enterprises, M/s
Aurorus Metal Private Limited, and M/s Bizzare
Commercial Private Limited. He used these entities to
generate bogus invoices and fraudulently availed
inadmissible ITC amounting to approximately 148.19
Crores. He admitted to creating these firms and using
individuals like Shri Ritesh Kumar as dummy
directors on a monthly salary, while retaining
complete control over the entities' finances and
operations.
Possession: He was found in possession of
substantial proceeds of crime. An analysis of his
BBl
2025:JHHC:31170
personal HDFC Bank account revealed unexplained
credits of over ₹15.40 crores from various shell
entities, for which he could not provide a legitimate
explanation.
2. Concealment and Layering:
In his statement, Shri Amit Agarwal confessed to the
detailed modus operandi, which involved creating
bogus bills and using a network of 'Angadias (hawala
operators) to return funds in cash after deducting
commission. This was a deliberate mechanism to
layer transactions and conceal their criminal origin.
His personal bank account was actively used as a
conduit to receive and layer illicit funds from the
broader syndicate, demonstrating his role in
concealing the proceeds of their joint criminal
enterprise
3. Use and Integration:
The investigation revealed that Amit Agarwal was a
significant beneficiary of the fraud. The illicit fund
were used to make substantial investments in real
estate and his business activities, thereby integrating
the proceeds of crime into the legitimate economy and
projecting them as untainted assets."
126. From the aforementioned paragraphs of the
prosecution complaint, it is evident that the petitioner is a
member of syndicate of co-accused persons namely Shive
Kumar Deora, Mohit Deora, Amit Gupta etc. and he is also
Director of fake shell companies an along with them
deliberately generating and availing fake Input Tax Credit
(ITC) by issuing bogus invoices and all of them are a party
with each other in acquisition, possession, use and
BBl
2025:JHHC:31170
concealment of proceeds of crime as well as claiming the
said proceeds of crime as untainted property and they have
deliberately generated proceeds of crime to acquire and use
it for personal gains.
127. It has come in the investigation that present
petitioner is one of the directors/proprietors in various
entities indulged in claiming ineligible ITC on bogus
invoices without delivering goods/ services and caused a
wrongful loss of Rs. 15.95 crores to the government
exchequer through illegal activities and he failed to explain
about the transactions which has been credited in his
account in the statement as recorded u/s 50 of PMLA.
128. Further, it is evident that the allegation against the
petitioner that he is part of organized syndicate operating
through 135 shell companies for issuance of bogus GST
invoices involving ITC exceeding Rs. 750 crores. These
invoices were used to illegally avail and pass on Input Tax
Credit (ITC) to various entities causing wrongful loss to the
government exchequer. The proceeds of crime were layered
through several accounts to project them as legitimate.
129. From investigation, it is evident that the petitioner
Amit Agarwal @ Vicky Bhalotia was a key mastermind in
the criminal conspiracy, operating as the head of the
syndicate's fraudulent activities in Jamshedpur,
Jharkhand. He was directly involved in creating and
BBl
2025:JHHC:31170
managing his own network of shell entities, generating
substantial proceeds of crime, and laundering these funds
in close coordination with the other masterminds.
130. It is evident from the prosecution complaint that the
petitioner directly and indirectly, indulged, knowingly
assisted, and was knowingly a party to and actually
involved in the processes and activities connected with the
proceeds of crime.
131. It has further come in the investigation that he
established and controlled a network of at least nine shell
companies, including M/s Greentech Steel Enterprises, M/s
Aurorus Metal Private Limited, and M/s Bizzare
Commercial Private Limited. He used these entities to
generate bogus invoices and fraudulently availed
inadmissible ITC amounting to approximately 148.19
Crores. He admitted to creating these firms and using
individuals like Shri Ritesh Kumar as dummy directors on a
monthly salary, while retaining complete control over the
entities' finances and operations.
132. The petitioner was found in possession of
substantial proceeds of crime. An analysis of his personal
HDFC Bank account revealed unexplained credits of over
₹15.40 crores from various shell entities, for which he could
not provide a legitimate explanation.
BBl
2025:JHHC:31170
133. In his statement also, he had confessed to the
detailed modus operandi, which involved creating bogus
bills and using a network of 'Angadias (hawala operators) to
return funds in cash after deducting commission. This was
a deliberate mechanism to layer transactions and conceal
their criminal origin. His, personal bank account was
actively used as a conduit to receive and layer illicit funds
from the broader syndicate, demonstrating his role in
concealing the proceeds of their joint criminal enterprise.
134. The investigation revealed that the present
petitioner was a significant beneficiary of the fraud. The
illicit funds were used to make substantial investments in
real estate and his business activities, thereby integrating
the proceeds of crime into the legitimate economy and
projecting them as untainted assets.
135. At this juncture it requires to refer herein that the
Hon'ble Apex Court in the case of Rohit Tandon vs.
Directorate of Enforcement (supra) while referring the
ratio of Ranjitsing Brahmajeetsing Sharma v. State of
Maharashtra & Ors., (2005) 5 SCC 294 has categorically
held that the Court ought to maintain a delicate balance
between a judgment of acquittal and conviction and an
order granting bail much before commencement of trial.
The duty of the Court at this stage is not to weigh the
BBl
2025:JHHC:31170
evidence meticulously but to arrive at a finding on the basis
of broad probabilities.
136. Further, the Hon'ble Apex Court in the case of Vijay
Madanlal Choudhary and Ors. Vs. Union of India and
Ors. (supra) has reiterated the same view and has observed
that the Court while dealing with the application for grant
of bail need not to delve deep into the merits of the case
and only a view of the court based on available material on
record is required. For ready reference, the relevant
paragraph is being quoted as under:
"303. We are in agreement with the observation made
by the Court in Ranjitsing Brahmajeetsing
Sharma [Ranjitsing Brahmajeetsing Sharma v. State of
Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057] .
The Court while dealing with the application for grant of
bail need not delve deep into the merits of the case and
only a view of the court based on available material on
record is required. The court will not weigh the evidence
to find the guilt of the accused which is, of course, the
work of the trial court. The court is only required to place
its view based on probability on the basis of reasonable
material collected during investigation and the said view
will not be taken into consideration by the trial court in
recording its finding of the guilt or acquittal during trial
which is based on the evidence adduced during the
trial. As explained by this Court in Nimmagadda
Prasad [Nimmagadda Prasad v. CBI, (2013) 7 SCC 466 :
(2013) 3 SCC (Cri) 575] , the words used in Section 45 of
the 2002 Act are "reasonable grounds for believing"
which means the court has to see only if there is a
genuine case against the accused and the prosecution is
BBl
2025:JHHC:31170
not required to prove the charge beyond reasonable
doubt."
137. Thus, prima-facie on the basis of the material
available in prosecution complaint the role of the
present petitioner in the alleged money laundering
cannot be negated.
138. It needs to refer herein that the Hon'ble Apex
Court in the case of Rana Ayyub v. Directorate of
Enforcement, (2023) 4 SCC 357 observed as follows:
"19. The word "money-laundering" is defined in Section
2(1)(p) of the Act to have the same meaning as assigned
to it in Section 3. Section 3 of the Act makes a person
guilty of the offence of money laundering, if he (1)
directly or indirectly attempts to indulge, or (n)
knowingly assists or, (im) knowingly is a party, or (iv) is
actually involved in any process or activity. Such
process or activity should be connected to "proceeds of
crime " including its concealment or possession or
acquisition or use. In addition, a person involved in such
process or activity connected to proceeds of crime,
should be projecting or claiming it as untainted property.
The Explanation under Section 3 makes it clear that
even if the involvement is in one or more of the following
activities or processes, namely: (i) concealment; (ii)
possession; (im) acquisition; (iv) use; (o) projecting it as
untainted property, or (vi) claiming it as untainted
property, the offence of money-laundering will be made
out.
20. Thus, Section 3 comprises of two essential limbs,
namely: (i) involvement in any process or activity, and
(ii) connection of such process or activity to the proceeds
of crime. The expression "proceeds of crime" is defined in
Section 2(1)(u) to mean any property derived or
obtained, directly or indirectly, by any person as a
BBl
2025:JHHC:31170
result of criminal activity relating to a scheduled offence
or the value of such property or where such property is
taken or held outside the country, then the property
equivalent in value held within the country or abroad."
139. In the light of the aforesaid statutory definitions, it
can safely be inferred that it is enough if the prosecution
establishes that there was generation of proceeds of crime
and the accused was involved in any process or activity in
connection with the proceeds of crime.
140. Hence, it appears that the petitioner is directly
indulged and is actually involved in all the activities
connected with the offence of money laundering, i.e., use or
acquisition, possession, concealment, and projecting or
claiming as untainted property, as defined u/s 3 of PML
Act, 2002.
141. Further, the offence of money laundering as
contemplated in Section 3 of the PML Act, 2002 has been
elaborately dealt with by the three Judge Bench in Vijay
Madanlal Choudhary (supra), in which it has been
observed that Section 3 has a wider reach. The offence as
defined captures every process and activity in dealing with
the proceeds of crime, directly or indirectly, and is not
limited to the happening of the final act of integration of
tainted property in the formal economy to constitute an act
of money laundering. Of course, the authority of the
Authorised Officer under the Act to prosecute any person
BBl
2025:JHHC:31170
for the offence of money laundering gets triggered only if
there exist proceeds of crime within the meaning of Section
2(1)(u) of the Act and further it is involved in any process or
activity. Not even in case of existence of undisclosed income
and irrespective of its volume, the definition of "Proceeds of
Crime" under Section 2(1)(u) will get attracted, unless the
property has been derived or obtained as a result of
criminal activity relating to a scheduled offence. The
property must qualify the definition of "Proceeds of Crime"
under Section 2(1)(u) of the Act. As observed, in all or whole
of the crime property linked to scheduled offence need not
be regarded as proceeds of crime, but all properties
qualifying the definition of "Proceeds of Crime" under
Section 2(1)(u) will necessarily be the crime properties.
142. To constitute any property as proceeds of crime, it
must be derived or obtained directly or indirectly by any
person as a result of criminal activity relating to a
scheduled offence. The explanation clarifies that the
proceeds of crime include property, not only derived or
obtained from scheduled offence but also any property
which may directly or indirectly be derived or obtained as a
result of any criminal activity relatable to the scheduled
offence. Clause (u) also clarifies that even the value of any
such property will also be the proceeds of crime.
BBl
2025:JHHC:31170
143. Now coming to the contentions as raised by the
learned counsel for the petitioner, wherein, he has taken
the ground that the petitioner is not accused in the
predicate offence, hence, cannot be made liable for money
laundering offence. But the contention of the learned
counsel appears to be misplaced reason being that it is
settled proposition of law that the offence of money
Laundering is independent of the scheduled offence,
particularly in matters related to the proceeds of crime.
144. It is evident that as per Section 3, there are six
processes or activities identified therein. They are, (i)
concealment; (ii) possession; (iii) acquisition; (iv) use; (v)
projecting as untainted property; and (vi) claiming as
untainted property. Even if a person does not retain the
money generated as proceeds of crime but "uses" it, he will
be guilty of the offence of money-laundering, since "use" is
one of the six activities mentioned in Section 3.
145. Further, it needs to refer herein that the Hon'ble
Supreme Court has consistently held, including in Pavana
Dibbur v. Directorate of Enforcement, 2023 SCC OnLine
SC 1586, as well as in Vijay Madanlal Choudhary &
Ors. v. Union of India & Ors., 2022 SCC OnLine SC
929, that the offence of money laundering under Section 3
of the PMLA is an independent offence. The Hon'ble Apex
Court has categorically laid down that it is not necessary
BBl
2025:JHHC:31170
for a person to be shown as an accused in the scheduled
offence for him to be prosecuted under the PMLA, provided
there exist proceeds of crime derived from a scheduled
offence and the person has indulged in or facilitated any
process or activity connected with such proceeds of crime.
146. In the aforesaid case, i.e., Pawana Dibbur (supra)
it has further been observed by referring the decision
rendered by the Hon'ble Apex Court in Vijay Madanlal
Choudhary and Ors. Vs. Union of India and Ors. (supra)
that the condition precedent for the existence of proceeds of
crime is the existence of a scheduled offence. At paragraph-
15 the finding has been given therein that on plain reading
of Section 3 of the Act, 2002, an offence under Section 3
can be committed after a scheduled offence is committed.
By giving an example, it has been clarified that if a person
who is unconnected with the scheduled offence, knowingly
assists the concealment of the proceeds of crime or
knowingly assists the use of proceeds of crime, in that case,
he can be held guilty of committing an offence under
Section 3 of the PMLA. Therefore, it is not necessary that a
person against whom the offence under Section 3 of the
PMLA is alleged must have been shown as the accused in
the scheduled offence.
147. Keeping in mind these essential elements that make
up the molecular structure of Section 3, this Court adverts
BBl
2025:JHHC:31170
in to facts of the instant case as discussed in preceding
paragraph is of view that the contention of the learned
counsel for the petitioner has no substance.
148. Further, the burden of proof is on the Petitioner
until the contrary is proved, the same is observed in
various judicial pronouncements and upheld in the case of
Vijay Madanlal Choudhary (supra). Further, in Rohit
Tandon v. Directorate of Enforcement, (2018) 11 SCC
46, the Hon'ble Supreme Court has also observed that the
provisions of section 24 of the PMLA provide that unless
the contrary is proved, the authority or the Court shall
presume that proceeds of crime are involved in money
laundering and the burden to prove that the proceeds of
crime are not involved, lies on the appellant.
149. Further, the contention of the learned counsel for
the petitioner that the Directorate has merely relied upon
the information from the predicate agency (DGGI) to justify
the arrest is incorrect and misleading. The Directorate has
independently collected, analyzed, and evaluated the
material forming the basis for the arrest. The Petitioner's
conduct, as revealed during the investigation including his
financial linkages, involvement in key entities like TE
Udhyog Pvt. Ltd. and Greentech Traders, handling of large-
scale ITC flows, and statements of dummy persons coerced
by him demonstrate not only his active role in laundering
BBl
2025:JHHC:31170
the proceeds of crime but also his tendency to interfere with
the investigation and key witnesses
150. The involvement of the Petitioner in directing
dummy persons, creating forged documents, and misusing
control over shell firms is not only substantiated but has
been corroborated by statements under Section 50 of the
PMLA and materials recovered during search.
151. Further, the grant of bail to the Petitioner in BA No.
569 of 2024 by this Court in connection with a predicate
offence has no bearing on the present bail application
under PMLA. It is a settled principle that the offence of
money laundering is a standalone and continuing offence,
as recognized in Vijay Madanlal Choudhary (supra), and
grant of bail in the predicate offence does not create any
presumption in favour of bail.
152. It requires to refer herein that the Petitioner was on
regular bail in the predicate offence or that no complaint
has been filed by the DGGI does not dilute or nullify the
independent action taken under the PMLA since both are
the parallel proceedings.
153. The learned counsel for the petitioner has further
contended that the petitioner has been implicated in the
present case on the basis of statement recorded under
Section 50 of the PML Act of the co-accused, who was
BBl
2025:JHHC:31170
already in custody, hence, the statement recorded under
Section 50 of the PML Act of the co-accused, who were
already in custody cannot be used against the present
petitioner as per the mandate of judgment rendered by the
Hon'ble Apex Court in the case of Prem Prakash Vs.
Union of India through the Directorate of Enforcement
(supra).
154. In the aforesaid context, it needs to refer herein that
there is no dispute regarding the settled proposition of law
that the statements recorded which are merely confessional
in nature ought to be ignored while adjudicating upon a
case as confessional statement of co-accused cannot be
treated as substantive evidence and such statements can
only be pressed into service when the Hon'ble Courts are
inclined to accept other evidences. Thus, instead of placing
reliance solely upon the statements of the petitioner and
the other co-accused persons recorded under Section 50 of
PMLA, the opposite party ought to have collected and relied
upon other evidence in order to prosecute the petitioner.
155. Herein, the argument is that the imputation of the
petitioner is based upon the statement recorded under
section 50 of the PML Act, 2002 of the co-accused person,
namely, Shiva Kumar Deora while he was in custody but
this Court after going through the prosecution report has
found that other witnesses who have not been arrayed as
BBl
2025:JHHC:31170
an accused in their statements recorded under section 50
of the PML Act have made specific imputation against the
petitioner.
156. Further herein, it is evident from the various
paragraphs of the prosecution complaint filed which have
been referred hereinabove, is supported by substantial
evidence gathered during the investigation and culpability
against the petitioner is not based solely upon on the
statements of the petitioner and his accomplices.
Furthermore, prima facie there is ample evidence
establishing the petitioner's involvement in the offence of
money laundering, which is further corroborated by
statements of other witnesses who were not arraigned as
accused in the instant case. Further, the petitioner's role
has already been discussed herein in detail in the
preceding paragraphs, therefore, the averments of the
petitioner are unfounded and liable to be dismissed.
157. It needs to refer herein that the three Judge Bench
the Hon'ble Apex Court in the case of Rohit Tandon vs.
Directorate of Enforcement" (supra) held that the
statements of witnesses recorded by Prosecution - ED are
admissible in evidence in view of Section 50. Such
statements may make out a formidable case about the
involvement of the accused in the commission of the offence
BBl
2025:JHHC:31170
of money laundering. For ready reference the relevant
paragraph is being quoted as under:
"31. Suffice it to observe that the appellant has not
succeeded in persuading us about the inapplicability of
the threshold stipulation under Section 45 of the Act. In
the facts of the present case, we are in agreement with
the view taken by the Sessions Court and by the High
Court. We have independently examined the materials
relied upon by the prosecution and also noted the
inexplicable silence or reluctance of the appellant in
disclosing the source from where such huge value of
demonetised currency and also new currency has been
acquired by him. The prosecution is relying on
statements of 26 witnesses/accused already recorded,
out of which 7 were considered by the Delhi High Court.
These statements are admissible in evidence, in view of
Section 50 of the 2002 Act. The same makes out a
formidable case about the involvement of the appellant
in commission of a serious offence of money laundering.
It is, therefore, not possible for us to record satisfaction
that there are reasonable grounds for believing that the
appellant is not guilty of such offence. Further, the
courts below have justly adverted to the antecedents of
the appellant for considering the prayer for bail and
concluded that it is not possible to hold that the
appellant is not likely to commit any offence ascribable
to the 2002 Act while on bail. Since the threshold
stipulation predicated in Section 45 has not been
overcome, the question of considering the efficacy of
other points urged by the appellant to persuade the
Court to favour the appellant with the relief of regular
bail will be of no avail. In other words, the fact that the
investigation in the predicate offence instituted in terms
of FIR No. 205/2016 or that the investigation qua the
appellant in the complaint CC No. 700 of 2017 is
completed; and that the proceeds of crime are already in
possession of the investigating agency and provisional
BBl
2025:JHHC:31170
attachment order in relation thereto passed on 13-2-
2017 has been confirmed; or that charge-sheet has been
filed in FIR No. 205/2016 against the appellant without
his arrest; that the appellant has been lodged in judicial
custody since 2-1-2017 and has not been interrogated
or examined by the Enforcement Directorate thereafter;
all these will be of no consequence."
158. In a recent judgment, the Hon'ble Supreme Court in
"Abhishek Banerjee & Anr. v. Directorate of
Enforcement", (2024) 9 SCC 22 has again made similar
observations:
"21. ...Section 160 which falls under Ch. XII empowers
the police officer making an investigation under the said
chapter to require any person to attend within the limits
of his own or adjoining station who, from the
information given or otherwise appears to be acquainted
with the facts and circumstances of the case, whereas,
the process envisaged by Section 50 PMLA is in the
nature of an inquiry against the proceeds of crime and is
not "investigation" in strict sense of the term for initiating
prosecution; and the authorities referred to in Section
48 PMLA are not the police officers as held in Vijay
Madanlal [Vijay Madanlal Choudhary v. Union of India,
(2023) 12 SCC 1] .
22. It has been specifically laid down in the said
decision that the statements recorded by the authorities
under Section 50 PMLA are not hit by Article
20(3) or Article 21 of the Constitution, rather such
statements recorded by the authority in the course of
inquiry are deemed to be the judicial proceedings in
terms of Section 50(4), and are admissible in evidence,
whereas the statements made by any person to a police
officer in the course of an investigation under Ch. XII of
the Code could not be used for any purpose, except for
the purpose stated in the proviso to Section 162 of the
Code. In view of such glaring inconsistencies
BBl
2025:JHHC:31170
between Section 50 PMLA and Sections 160/161CrPC,
the provisions of Section 50 PMLA would prevail in
terms of Section 71 read with Section 65 thereof."
159. In light of the foregoing judicial pronouncements, it
is evident that statements recorded under Section 50 of the
PML Act, 2002 hold evidentiary value and are admissible in
legal proceedings. The Hon'ble Supreme Court, while
emphasizing the legal sanctity of such statements, observed
that they constitute valid material upon which reliance can
be placed to sustain allegations under the PML Act, 2002.
160. In the aforesaid judgment, the Hon'ble Supreme
Court also reaffirmed the admissibility of Section 50 of the
PML Act, 2002 distinguishing them from statements
recorded under the Cr.PC. The Court underscored that
such statements, being recorded during an inquiry rather
than an investigation, are not subject to the restrictions
under Article 20(3) and Article 21 of the Constitution.
Instead, they are deemed to be judicial proceedings
under Section 50(4) of the PML Act, 2002 and, therefore,
admissible as evidence in proceedings under the PML Act,
2002. The Hon'ble Apex Court further clarified that the
provisions of Section 50 of the PML Act, 2002 having an
overriding effect by virtue of Sections 65 and 71 of the PML
Act, 2002 prevail over the procedural safeguards under
the CrPC.
BBl
2025:JHHC:31170
161. In the instant case, it has been found that during
the course of investigation, statement recorded of the
accused persons as also the statement of various other
witnesses.
162. Hence, the contention is that no independent
corroborative material exists is patently false. As already
elaborated in the "Brief Facts" and "Role of the Accused"
and in the Prosecution Complaint, there exists
documentary, financial, and digital evidence linking the
Petitioner with entities that generated fake invoices, availed
illegal ITC, and layered the proceeds of crime through a
complex chain of shell companies and proxy accounts. The
role of the Petitioner is not based merely on statements but
is fortified by the recovery of incriminating digital
documents during the course of searches conducted on
08.05.2025.
163. The reliance placed on Prem Prakash v. Union of
India (supra) is misplaced. The observations therein
pertain to co-accused statements under Section 30 of the
Evidence Act and are not intended to override the
admissibility of statements under Section 50 of PMLA in the
unique statutory scheme of the PMLA. In fact, the Hon'ble
Supreme Court has recognized the evidentiary sanctity of
Section 50 in Vijay Madanlal Choudhary v. Union of
India, 2022 SCC OnLine SC 929, affirming that such
BBl
2025:JHHC:31170
statements are legally distinct from statements to police
under the Evidence Act.
164. Thus, the petitioner knowingly is as party and is
actually involved in all the activities connected with the
offence of money laundering, i.e., use or acquisition,
possession, concealment, and projecting or claiming as
untainted property.
165. Having examined the admissibility of statements
recorded under Section 50 of the PML Act, 2002, this Court
shall now proceed to analyze the statutory framework
governing the burden of proof under Section 24 in
proceedings related to proceeds of crime.
"24. Burden of proof. --In any proceeding relating to
proceeds of crime under this Act, -- (a) in the case of a
person charged with the offence of money-laundering
under section 3, the Authority or Court shall, unless the
contrary is proved, presume that such proceeds of crime
are involved in money-laundering; and
(b) in the case of any other person the Authority or
Court, may presume that such proceeds of crime are
involved in money-laundering."
166. From the bare perusal of Section 24 of the PML Act,
2002, it is evident that once a person is charged with the
offence of money laundering under Section 3 of the PML
Act, 2002, the law presumes that the proceeds of crime are
involved in money laundering unless the contrary is proven
by the accused.
BBl
2025:JHHC:31170
167. In the present case, the investigating agency has
relied not only on the statement of co-accused
under Section 50 of the PML Act, 2002 but also other
evidences which indicate the applicant's active role in the
alleged money laundering activities.
168. By virtue of Section 24 of the PML Act, 2002, the
respondent-ED is not required to conclusively establish the
applicant's guilt at the pre-trial stage, rather, the applicant
must demonstrate that the proceeds of crime attributed to
him are not linked to money laundering. In the absence of
any rebuttal by the applicant, the presumption under
Section 24 of the PML Act, 2002 stands in favor of the
respondent, thereby, justifying his continued detention.
169. With regard to the above, this Court has referred to
the judgment of the Hon'ble Supreme Court in Prem
Prakash v. Union of India through Directorate of
Enforcement, (supra) wherein, the following observations
were made:
"18.In Vijay Madanlal Choudhary [Vijay Madanlal
Choudhary v. Union of India, (2023) 12 SCC 1] dealing
with Section 24 PMLA, the three-Judge Bench held as
under : (SCC pp. 229-31, paras 237 & 239-40)
"237. Be that as it may, we may now proceed to
decipher the purport of Section 24 of the 2002 Act. In the
first place, it must be noticed that the legal presumption
in either case is about the involvement of proceeds of
crime in money-laundering. This fact becomes relevant,
only if, the prosecution or the authorities have
BBl
2025:JHHC:31170
succeeded in establishing at least three basic or
foundational facts. First, that the criminal activity
relating to a scheduled offence has been committed.
Second, that the property in question has been derived
or obtained, directly or indirectly, by any person as a
result of that criminal activity. Third, the person
concerned is, directly or indirectly, involved in any
process or activity connected with the said property
being proceeds of crime. On establishing the fact that
there existed proceeds of crime and the person
concerned was involved in any process or activity
connected therewith, itself, constitutes offence of money-
laundering. The nature of process or activity has now
been elaborated in the form of Explanation inserted vide
Finance (No. 2) Act, 2019. On establishing these
foundational facts in terms of Section 24 of the 2002
Act, a legal presumption would arise that such proceeds
of crime are involved in money-laundering. The fact that
the person concerned had no causal connection with
such proceeds of crime and he is able to disprove the
fact about his involvement in any process or activity
connected therewith, by producing evidence in that
regard, the legal presumption would stand rebutted."
170. Be it noted that the legal presumption under
Section 24(a) of the Act 2002, would apply when the
person is charged with the offence of money-laundering
and his direct or indirect involvement in any process or
activity connected with the proceeds of crime, is
established. The existence of proceeds of crime is,
therefore, a foundational fact, to be established by the
prosecution, including the involvement of the person in
any process or activity connected therewith. Once these
BBl
2025:JHHC:31170
foundational facts are established by the prosecution,
the onus must then shift on the person facing charge of
offence of money- laundering to rebut the legal
presumption that the proceeds of crime are not involved
in money-laundering, by producing evidence which is
within his personal knowledge of the accused.
171. In other words, the expression "presume" is
not conclusive. It also does not follow that the legal
presumption that the proceeds of crime are involved in
money-laundering is to be invoked by the authority or
the court, without providing an opportunity to the
person to rebut the same by leading evidence within his
personal knowledge.
172. Such onus also flows from the purport
of Section 106 of the Evidence Act. Whereby, he must
rebut the legal presumption in the manner he chooses
to do and as is permissible in law, including by replying
under Section 313 of the 1973 Code or even by cross-
examining prosecution witnesses. The person would get
enough opportunity in the proceeding before the
authority or the court, as the case may be. He may be
able to discharge his burden by showing that he is not
involved in any process or activity connected with the
proceeds of crime.
BBl
2025:JHHC:31170
173. In the case of "Collector of Customs,
Madras & Ors. v. D. Bhoormall", (1974) 2 SCC 544
proceedings were initiated under Section 167(8)(c) of the
Customs Act for confiscation of contraband or smuggled
goods and it was observed by the Hon'ble Apex Court
that on the principle underlying Section 106, Evidence
Act, the burden to establish those facts is cast on the
person concerned; and, if he fails to establish or explain
those facts, an adverse inference of facts may arise
against him. The relevant paragraph of the aforesaid
Judgment is being quoted as under:
"Since it is exceedingly difficult, if not absolutely
impossible, for the prosecution to prove facts which are
especially within the knowledge of the opponent or the
accused, it is not obliged to prove them as part of its
primary burden.
... On the principle underlying Section 106, Evidence
Act, the burden to establish those facts is cast on the
person concerned; and, if he fails to establish or explain
those facts, an adverse inference of facts may arise
against him, which coupled with the presumptive
evidence adduced by the prosecution or the Department
would rebut the initial presumption of innocence in
favour of that person, and in the result, prove him
guilty."
174. Thus, in light of the aforesaid principles and
the law enunciated by the Hon'ble Supreme Court
in Vijay Madanlal Choudhary (Supra), this Court
must determine whether the foundational facts
necessary to invoke the presumption under Section
BBl
2025:JHHC:31170
24 of the PML Act, 2002 have been established by the
respondent/ED.
175. Herein as per the prosecution complaint which
has been annexed herein as annexure, it is evident that
there is ample evidence has been led by the prosecuting
agency in order to fix the culpability of the present
petitioner, therefore the scope of section 24 of Act 2002
has pivotal role at this stage.
176. Now in the light of aforesaid discussion at this
juncture, this Court thinks it fit to revisit the scope of
Section 45 of the PML Act, 2002. As discussed in
preceding paragraphs that Section 45 of the PML Act,
2002 provides twin test. First 'reason to believe' is to be
there for the purpose of reaching to the conclusion that
there is no prima facie case and second condition is
that the accused is not likely to commit any offence
while on bail.
177. Sub-section (1)(ii) of Section 45 of the PML Act,
2002, provides that if the Public Prosecutor opposes
the application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty of
such offence and that he is not likely to commit any
offence while on bail, meaning thereby, the parameter
which is to be followed by the concerned court that
satisfaction is required to be there for believing that
BBl
2025:JHHC:31170
such accused person is not guilty of such offence and
is not likely to commit offence while on bail.
178. Section 45(2) of the Act 2002 provides to
consider the limitation for grant of bail which is in
addition to the limitation under the Code of Criminal
Procedure, 1973, i.e., limitation which is to be
considered while granting the benefit either in exercise
of jurisdiction conferred to this Court under BNSS,
2023 is to be taken into consideration.
179. It is, thus, evident by taking into consideration
the provision of Sections 19(1), 45(1) and 45(2) of PML
Act, 2002 that the conditions provided therein are
required to be considered while granting the benefit of
regular bail in exercise of power conferred under
statute apart from the twin conditions which has been
provided under Section 45(1) of the Act, 2002.
180. Thus, Section 45 of the PML Act, 2002 turns
the principle of bail is the rule and jail is the exception
on its head. The power of the Court to grant bail is
further conditioned upon the satisfaction of the twin
conditions prescribed under Section 45(1) (i) and (ii)
PML Act, 2002. While undertaking this exercise, the
Court is required to take a prima facie view on the basis
of materials collected during investigation. The
expression used in Section 45 of PML Act, 2002 are
BBl
2025:JHHC:31170
"reasonable grounds for believing" which means that
the Court has to find, from a prima facie view of the
materials collected during investigation that there are
reasonable grounds to believe that the accused has not
committed the offence and that there is no likelihood of
him committing an offence while on bail. Recently, in
Tarun Kumar v Assistant Directorate of
Enforcement, (supra) the Hon'ble Supreme Court has
held as under:
"17. As well settled by now, the conditions specified
under Section 45 are mandatory. They need to be
complied with. The Court is required to be satisfied that
there are reasonable grounds for believing that the
accused is not guilty of such offence and he is not likely
to commit any offence while on bail. It is needless to say
that as per the statutory presumption permitted under
Section 24 of the Act, the Court or the Authority is
entitled to presume unless the contrary is proved, that in
any proceedings relating to proceeds of crime under the
Act, in the case of a person charged with the offence of
money laundering under Section 3, such proceeds of
crime are involved in money laundering. Such conditions
enumerated in Section 45 of PML Act will have to be
complied with even in respect of an application for bail
made under Section 439 Cr. P.C. in view of the
overriding effect given to the PML Act over the other law
for the time being in force, under Section 71 of the PML
Act."
181. Further, at the stage of recording statements
during enquiry, it cannot be construed as an
investigation for prosecution. The process envisaged
BBl
2025:JHHC:31170
under Section 50 of PML Act, 2002 is in the nature of
an inquiry against the proceeds of crime and it is not
an investigation and the authorities who are recording
the statements are not police officers and therefore,
these statements can be relied upon as admissible
piece of evidence before the Court. The summons
proceedings and recording of statements under PML
Act, 2002 are given the status of judicial proceedings
under Section 50(4) of PML Act, 2002.
182. The statements that were recorded from the
witnesses during the investigation have been dealt with
in prosecution complaint and many of the statements
clearly implicate the petitioner. Therefore, the
statements that have been recorded from the witnesses
and which has been relied upon, is also a strong
material that prima facie establishes the offence of
money laundering against the present petitioner.
183. Thus, on the basis of the discussion made
hereinabove, the contention of the learned counsel for
the petitioner that even if the entire ECIR will be taken
into consideration, no offence will be said to be
committed so as to attract the ingredients of Sections 3
& 4 of the PML Act, 2002, is totally misplaced in the
light of accusation as mentioned in prosecution
complaint.
BBl
2025:JHHC:31170
184. Thus, this Court, after taking note of the
settled legal proposition, is of view that the aforesaid
contention is not tenable in the eye of law.
185. So far as the issue of period of custody as
agitated by learned counsel for the petitioner is
concerned, it is settled proposition of law which has
been settled by the Hon'ble Apex Court that the period
of incarceration (herein about 05 month) or delay in
trial alone cannot be ground to release the petitioner on
bail, rather in case of scheduled offences/special
offences the seriousness of the matter and the societal
impact should be taken in to consideration by the
Court concerned while enlarging the petitioner on bail.
186. Further, this Court is conscious with the fact
that personal liberty is utmost requirement to maintain
the individuality of the person concerned but at the
same time it is equally settled that the balance between
personal liberty and societal impact of the alleged
offence should be taken care of by the Court concerned.
187. Further, the Hon'ble Apex Court while dealing
with the offences under UAP Act 1967, in the case of
Gurwinder Singh v. State of Punjab (supra) and
taking in to consideration the ratio of judgment of
Union of India vs. K.A. Najeeb, (2021) 3 SCC 713
has observed that mere delay in trial pertaining to
BBl
2025:JHHC:31170
grave offences as one involved in the instant case
cannot be used as a ground to grant bail, for ready
reference the relevant paragraph is being quoted as
under:
"46. As already discussed, the material available on
record indicates the involvement of the appellant in
furtherance of terrorist activities backed by members of
banned terrorist organisation involving exchange of
large quantum of money through different channels
which needs to be deciphered and therefore in such a
scenario if the appellant is released on bail there is
every likelihood that he will influence the key witnesses
of the case which might hamper the process of justice.
Therefore, mere delay in trial pertaining to grave
offences as one involved in the instant case cannot be
used as a ground to grant bail. Hence, the aforesaid
argument on behalf of the appellant cannot be
accepted."
188. Thus, on the basis of the aforesaid settled
position of law it is evident that mere proposed delay in
trial pertaining to grave offences as one involved in the
instant case cannot be used as a ground to grant bail.
189. Admittedly, the petitioner has been in judicial
custody since May 2025 but delay, under the aforesaid
circumstances, does not entitle the petitioner to bail.
The Hon'ble Supreme Court in Tarun Kumar v.
Directorate of Enforcement, 2023 SCC OnLine SC
1486, has authoritatively held that while the period of
custody may be a relevant factor, it cannot by itself
override the gravity of the offence, the seriousness of
BBl
2025:JHHC:31170
allegations or the statutory twin conditions under
Section 45 of the Act 2002.
190. Similarly, in Satyendar Kumar Jain v.
Directorate of Enforcement, 2024 SCC OnLine SC
306, the Hon'ble Apex Court refused bail despite
protracted proceedings, noting that the complexity
inherent in economic offences often necessitates
lengthy trials.
191. Thus, on the basis of the aforesaid discussions
and taking into consideration the grave nature of the
allegations, the sophisticated modus operandi
employed to project tainted property as untainted, and
the strict statutory framework governing bail under the
PML Act, 2002, it is the considered view of this Court
that no ground exists for the petitioner to claim the
benefit of bail on merits. The gravity of the offence, and
the serious allegations of facilitating the laundering of
proceeds of crime continue to justify the petitioner's
custody under the strict rigours of Section 45 of the Act
2002.
192. This Court while considering the prayer for
regular bail has taken into consideration that though
this Court is not sitting in appeal on the order passed
by learned trial court but only for the purpose of
considering the view which has been taken by learned
BBl
2025:JHHC:31170
court while rejecting the prayer for bail, this Court is
also in agreement with the said view based upon the
material surfaced in course of investigation, as referred
hereinabove.
193. This Court is conscious of this fact that while
deciding the issue of granting bail in grave economic
offences it is the utmost duty of the Court that the
nature and gravity of the alleged offence should have
been kept in mind because corruption poses a serious
threat to our society should be dealt with by iron hand.
194. Further, it is required to refer herein that the
Money Laundering is an economic offence and
economic offences comes under the of grave offences
hence needs to be visited with a different approach in
the matter of bail as held by the Hon'ble Apex court in
the case of "Y. S Jagan Mohan Reddy v/s Central
Bureau of Investigation", reported in (2013) 7 SCC
439. For ready reference, the relevant paragraphs of
the aforesaid judgments are being quoted as under:
"34. Economic offences constitute a class
apart and need to be visited with a different
approach in the matter of bail. The economic
offences having deep-rooted conspiracies and
involving huge loss of public funds need to be
viewed seriously and considered as grave
offences affecting the economy of the country
as a whole and thereby posing serious threat
to the financial health of the country."
195. Similarly, the Hon'ble Apex Court in case of
"Nimmagadda Prasad Vs. Central Bureau of
BBl
2025:JHHC:31170
Investigation", reported in (2013) 7 SCC 466 has
reiterated the same view in paragraphs-23 to 25 which
reads as under:
"23. Unfortunately, in the last few years, the country
has been seeing an alarming rise in white-collar crimes,
which has affected the fibre of the country's economic
structure. Incontrovertibly, economic offences have
serious repercussions on the development of the country
as a whole. In State of Gujarat v. Mohanlal Jitamalji
Porwal [(1987) 2 SCC 364 : 1987 SCC (Cri) 364] this
Court, while considering a request of the prosecution for
adducing additional evidence, inter alia, observed as
under: (SCC p. 371, para 5)
"5. ... The entire community is aggrieved if the economic
offenders who ruin the economy of the State are not
brought to book. A murder may be committed in the heat
of moment upon passions being aroused. An economic
offence is committed with cool calculation and deliberate
design with an eye on personal profit regardless of the
consequence to the community. A disregard for the
interest of the community can be manifested only at the
cost of forfeiting the trust and faith of the community in
the system to administer justice in an even-handed
manner without fear of criticism from the quarters which
view white-collar crimes with a permissive eye
unmindful of the damage done to the national economy
and national interest."
24. While granting bail, the court has to keep in mind
the nature of accusations, the nature of evidence in
support thereof, the severity of the punishment which
conviction will entail, the character of the accused,
circumstances which are peculiar to the accused,
reasonable possibility of securing the presence of the
accused at the trial, reasonable apprehension of the
witnesses being tampered with, the larger interests of
the public/State and other similar considerations. It has
BBl
2025:JHHC:31170
also to be kept in mind that for the purpose of granting
bail, the legislature has used the words "reasonable
grounds for believing" instead of "the evidence" which
means the court dealing with the grant of bail can only
satisfy itself as to whether there is a genuine case
against the accused and that the prosecution will be
able to produce prima facie evidence in support of the
charge. It is not expected, at this stage, to have the
evidence establishing the guilt of the accused beyond
reasonable doubt.
25. Economic offences constitute a class apart and
need to be visited with a different approach in the
matter of bail. The economic offence having deep-rooted
conspiracies and involving huge loss of public funds
needs to be viewed seriously and considered as a grave
offence affecting the economy of the country as a whole
and thereby posing serious threat to the financial health
of the country."
196. The Hon'ble Apex Court in the case of "Central
Bureau of Investigation Vs Santosh Karnani and
Another", 2023 SCC OnLine SC 427 has observed
that corruption poses a serious threat to our society
and must be dealt with iron hands. The relevant
paragraph of the aforesaid judgment is being referred as
under:-
"31. The nature and gravity of the alleged offence
should have been kept in mind by the High Court.
Corruption poses a serious threat to our society
and must be dealt with iron hands. It not only
leads to abysmal loss to the public exchequer but
also tramples good governance. The common man
stands deprived of the benefits percolating under
social welfare schemes and is the worst hit. It is
aptly said, "Corruption is a tree whose branches
are of an unmeasurable length; they spread
everywhere; and the dew that drops from thence,
Hath infected some chairs and stools of
authority." Hence, the need to be extra conscious."
BBl
2025:JHHC:31170
197. It requires to refer herein that the Hon'ble
Apex Court in catena of judgments has held that the
economic offences constitute a class apart and need to
be visited with a different approach in the matter of
bail. The economic offences having deep-rooted
conspiracies and involving huge loss of public funds
need to be viewed seriously and considered as grave
offences affecting the economy of the country as a whole
and thereby posing serious threat to the financial
health of the country.
198. The Hon'ble Apex Court has further observed
that with the advancement of technology and Artificial
Intelligence, the economic offences like money
laundering have become a real threat to the functioning
of the financial system of the country and have become
a great challenge for the investigating agencies to detect
and comprehend the intricate nature of transactions, as
also the role of the persons involved therein. Reference
in this regard may be made to the judgment rendered
by the Hon'ble Apex Court in the case of "Tarun Kumar
vs. Assistant Director Directorate of Enforcement"
(supra). The relevant paragraphs of the aforesaid
Judgment are being quoted as under:
"22. Lastly, it may be noted that as held in catena of
decisions, the economic offences constitute a class apart
BBl
2025:JHHC:31170
and need to be visited with a different approach in the
matter of bail. The economic offences having deep-rooted
conspiracies and involving huge loss of public funds
need to be viewed seriously and considered as grave
offences affecting the economy of the country as a whole
and thereby posing serious threat to the financial health
of the country. Undoubtedly, economic offences have
serious repercussions on the development of the country
as a whole. To cite a few judgments in this regard
are Y.S. Jagan Mohan Reddy v. Central Bureau of
Investigation, Nimmagadda Prasad v. Central Bureau of
Investigation, Gautam Kundu v. Directorate of
Enforcement (supra), State of Bihar v. Amit Kumar alias
Bachcha Rai. This court taking a serious note with
regard to the economic offences had observed as back
as in 1987 in case of State of Gujarat v. Mohanlal
Jitamalji Porwal as under:--
"5... The entire community is aggrieved if the economic
offenders who ruin the economy of the State are not
brought to books. A murder may be committed in the
heat of moment upon passions being aroused. An
economic offence is committed with cool calculation and
deliberate design with an eye on personal profit
regardless of the consequence to the community. A
disregard for the interest of the community can be
manifested only at the cost of forfeiting the trust and
faith of the community in the system to administer
justice in an even-handed manner without fear of
criticism from the quarters which view white collar
crimes with a permissive eye unmindful of the damage
done to the National Economy and National Interest..."
23. With the advancement of technology and
Artificial Intelligence, the economic offences like
money laundering have become a real threat to the
functioning of the financial system of the country
and have become a great challenge for the
investigating agencies to detect and comprehend
the intricate nature of transactions, as also the
BBl
2025:JHHC:31170
role of the persons involved therein. Lot of minute
exercise is expected to be undertaken by the
Investigating Agency to see that no innocent person is
wrongly booked and that no culprit escapes from the
clutches of the law. When the detention of the accused
is continued by the Court, the courts are also expected
to conclude the trials within a reasonable time, further
ensuring the right of speedy trial guaranteed by
Article 21 of the Constitution.
24. With the afore-stated observations, the appeal is
dismissed."
199. This Court, considering the aforesaid material
available against the petitioner quoted and referred
hereinabove in such a grave nature of offence and
applying the principle of grant of bail wherein the
principle of having prima facie case is to be followed, is of
the view that it is not a fit case of grant of bail.
200. Having regard to the entirety of the facts and
circumstances of the case, this Court is of the view that
the petitioner has miserably failed to satisfy this Court
that there are reasonable grounds for believing that he is
not guilty of the alleged offences. On the contrary, there
is sufficient material collected by the respondent-ED to
show that he is prima facie guilty of the alleged offences.
201. For the foregoing reasons, having regard to facts
and circumstances, as have been analyzed hereinabove,
since the petitioner has failed to make out a special case
to exercise the power to grant bail and considering the
facts and parameters, necessary to be considered for
BBl
2025:JHHC:31170
adjudication of bail, this Court does not find any
exceptional ground to exercise its discretionary
jurisdiction to grant bail.
202. It is evident from the various paragraphs of the
prosecution report dated 05.07.2025 which have been
quoted and referred hereinabove that the allegations
levelled against the Petitioner are of an extremely grave
and serious in nature, striking at the very foundation of
the country's economic and financial system. The same
pertains to fraudulent transactions running into
hundreds of crores of rupees, executed through a
complex and deliberate layering of illicit funds, and
culminating in the acquisition and projection of
properties derived from such tainted sources as
untainted assets. The Petitioner's activities have been
found to be indispensable to the layering and integration
stages of the laundering process, involving multiple shell
companies and bank accounts under his de facto control.
203. It is also pertinent that delays frequently arise
from procedural applications and thus, given the grave
nature of the allegations, the sophisticated modus
operandi employed to project tainted property as
untainted, and the strict statutory framework governing
bail under the PMLA, no ground exists for the petitioner
to claim the benefit of bail either on merits or on account
BBl
2025:JHHC:31170
of delay. The gravity of the offence, and the serious
allegations of facilitating the laundering of proceeds of
crime continue to justify the petitioner's custody under
the strict rigours of Section 45 of the Act 2002.
204. Thus, the magnitude of the fraud, its organized
nature, and the systematic siphoning of funds, the
present case strikes at the core of the country's economic
and financial fabric. The fraudulent availment and
passing of fake ITC not only caused direct financial loss
to the Government but also undermined the sanctity of
the GST regime, which is based on self-declaration and
trust.
205. On the basis of discussions made hereinabove it
is the considered view of this Court that granting bail to
the Petitioner would send a wrong signal to society and
embolden economic offenders, thereby, undermining
public confidence in the justice delivery system. The
offence in question is not a mere fiscal offence but a
crime against the economic health of the nation, with a
cascading effect on honest taxpayers, market integrity,
and state revenue, therefore, this Court is of the view that
it is not a case where the prayer for bail is to be granted.
206. In the result, the instant bail application stands
dismissed.
BBl
2025:JHHC:31170
207. It is made clear that any observations made herein
are prima-facie for consideration of matter of bail only
and the view expressed herein shall not be construed as
an expression on the merits of the case.
208. The learned Trial Court shall proceed with the
matter uninfluenced by any observations made by this
Court and shall decide the case strictly in accordance
with law.
209. Pending interlocutory application(s), if any, also
stands disposed of.
(Sujit Narayan Prasad, J.)
08/10/2025
A.F.R.
Rohit/-
Uploaded on 09/10/2025
BBl
