PMLA money-laundering allegations over fictitious accounts and investor inducement: s.50 custodial statement excluded, bail granted u/s45

HC considered bail under PMLA, applying the mandatory twin conditions in s.45. It held that the applicant's s.50 statement recorded while in custody was inadmissible against the maker in view of SC law that custodial statements to the same agency are not made with a free mind; consequently, the remaining material did not prima facie link the applicant to opening fictitious accounts or inducing investors, and his role was distinguishable from a co-accused allegedly managing dummy accounts for commission. Given completion of investigation, non-commencement of trial, and prolonged pre-trial incarceration, HC invoked Article 21's speedy-trial and liberty guarantees to prevent punitive detention and granted bail on conditions.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, on the material placed, the applicant satisfied the threshold for bail in a prosecution under the PMLA, including consideration of the mandatory bail rigours and the statutory presumption relating to "proceeds of crime".

(ii) Whether the applicant's statement recorded under Section 50 of the PMLA, when recorded during custody, could be relied upon against him for deciding bail.

(iii) Whether prolonged pre-trial incarceration, with investigation complete and trial yet to commence, warranted release on bail on the touchstone of Article 21, notwithstanding restrictive statutory provisions.

(iv) Whether apprehensions of flight risk, witness influence, or evidence tampering were sufficient to deny bail, or could be addressed by stringent conditions, having regard to the nature of witnesses and custody of documents.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Bail under the PMLA-assessment of prima facie material, mandatory bail rigours, and presumption regarding proceeds of crime

Legal framework (as discussed by the Court): The Court noted that the conditions under Section 45 of the PMLA are mandatory. The Court also considered Section 24 of the PMLA, under which a presumption operates that proceeds of crime are involved in money-laundering unless the contrary is proved, and that once foundational facts are established the onus shifts to the accused to rebut the presumption by evidence within personal knowledge. The Court further treated money-laundering as an independent offence connected with "proceeds of crime", requiring prima facie existence of proceeds of crime and a process or activity connected therewith.

Interpretation and reasoning: On the available record, the Court found no prima facie material connecting the applicant to opening of the relevant bank accounts or to inducing investors to invest on the concerned platform in the manner alleged. The Court also noted that the listed witnesses in the complaint were official witnesses, and that investors whose statements were recorded during investigation did not appear in the list of witnesses. While the applicant's receipt of substantial sums and acquisition of property required verification, the Court held that such verification was to occur at the appropriate stage and did not, on the present material, supply a prima facie link sufficient to treat him as similarly placed with a co-accused alleged to have opened dummy accounts and received commission on credits routed through such accounts. The Court therefore distinguished the applicant's role from that co-accused and held they were not similarly circumstanced for bail purposes.

Conclusions: The Court was not satisfied that the record, at the bail stage, prima facie connected the applicant with the core account-opening/transaction-routing conduct alleged, and treated the applicant's role as distinguishable from the co-accused whose bail had been refused. This supported grant of bail, subject to conditions.

Issue (ii): Admissibility/reliance on a Section 50 PMLA statement recorded during custody

Legal framework (as discussed by the Court): The Court applied the principle that where an accused is in custody under the PMLA, any statement recorded under Section 50 to the same investigating agency is inadmissible against the maker because the maker cannot be regarded as operating with a free mind.

Interpretation and reasoning: The Court held that the applicant's Section 50 statement recorded during custody was inadmissible against him. Although the statement contained disclosures about commission, promotional activity, and purchase of assets, the Court did not treat the custodial statement as usable against the applicant to deny bail.

Conclusions: The custodial Section 50 statement was held inadmissible against the applicant and was not relied upon as incriminating material for refusing bail.

Issue (iii): Article 21-prolonged incarceration with investigation complete and trial not commenced

Legal framework (as discussed by the Court): The Court weighed the right to speedy trial and the right to liberty under Article 21 and held that these protections apply irrespective of the nature of crime. The Court further held that a constitutional court cannot be restrained from granting bail by restrictive statutory provisions where Article 21 rights are infringed, and that prolonged incarceration prior to guilt should not become punitive detention.

Interpretation and reasoning: The Court emphasized that the applicant had been in custody since December 2023; investigation had been completed; the last Section 50 statement was recorded in early January 2024; searches and seizures concluded shortly thereafter; and trial was yet to commence. On this footing, the Court treated continued custody as prolonged pre-trial incarceration and considered it decisive that liberty and speedy trial concerns required release on bail.

Conclusions: Bail was granted primarily on the touchstone of Article 21, given prolonged pre-trial incarceration, completion of investigation, and non-commencement of trial.

Issue (iv): Flight risk, tampering, and witness influence-whether manageable through conditions

Legal framework (as discussed by the Court): The Court applied general bail considerations relevant to economic offences (including securing presence at trial and preventing tampering), and evaluated whether risk factors could be mitigated by stringent conditions.

Interpretation and reasoning: Although the prosecution asserted the applicant had earlier evaded arrest and posed a flight risk, and might influence witnesses or tamper with evidence, the Court found these concerns could be addressed by stringent conditions. It reasoned that (a) attendance could be secured by conditions; (b) the cited witnesses were official witnesses with little scope for influence; and (c) the case was based on documentary evidence in the custody of the enforcement agency, leaving no real scope for tampering.

Conclusions: The Court held that the stated risks did not justify continued detention and could be neutralised by strict bail conditions, including surrender of passport, travel restrictions, mandatory appearance, and prohibitions on contacting witnesses or tampering with evidence.

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