TaxTMI 
TaxTMI 
2026 (1) TMI 211
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Proceedings: The present proceedings arise out of FIR No. 04/2024 dated 17.01.2024 registered by the EOW/ACB, Raipur, for offences punishable under Sections 420, 467, 471 and 120-B of the Indian Penal Code, 1860 and Sections 7 and 12 of the Prevention of Corruption Act, 1988, alleging a large-scale criminal conspiracy in the excise administration of the State of Chhattisgarh during the period 2019 to 2023, resulting in an alleged loss of approximately Rs. 2161 crore to the State exchequer. 3. Initiation of PMLA Investigation On the basis of the said scheduled offences, proceedings under the Prevention of Money Laundering Act, 2002 were initiated by the Directorate of Enforcement through ECIR No. RPZO/04/2024 dated 11.04.2024. The gravamen of the ED case is that the proceeds generated from the alleged excise scam constitute "proceeds of crime" which were concealed, layered and projected as untainted property by various accused persons. 4. Excise Policy Framework and Institutional Structure The excise policy of the State underwent a structural change in 2017 with the creation of the Chhattisgarh State Marketing Corporation Limited (CSMCL), entrusted with exclusive ret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed Proceeds of Crime As per the ED, the cumulative proceeds of crime generated through PART-A, PART-B, PART-C and FL-10A mechanisms are stated to be in excess of Rs.2161 crore. Parallel proceedings by ACB/EOW have also alleged generation of proceeds exceeding Rs.2500 crore through scheduled offences. 10. Role Attributed to Various Accused and the present applicant The prosecution case assigns differentiated roles to bureaucrats, politicians, excise officials, distillers, logistics providers, manpower contractors, hologram suppliers and cash collection agencies, alleging that each segment was aligned to ensure seamless operation of the alleged racket. 11. In so far as the role of the present applicant is concerned, it is alleged that he was associated with certain individuals who are stated to be part of the said syndicate. However, the records reveal that the applicant is not alleged to have held any official or statutory position in the Excise Department, Chhattisgarh State Marketing Corporation Limited (CSMCL), Chhattisgarh State Beverage Corporation Limited (CSBCL), or any authority connected with formulation or implementation of excise policy. No administrative orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er of Karti Chidambaram Vs. Directorate of Enforcement (2022)11 SCC 566, while granting bail in PMLA case held that "Arrest is not mandatory merely because it is lawful. Custodial detention must be justified by necessity." 15. It is asserted that the applicant has not been shown to have directly possessed the proceeds of crime. He allegedly only facilitated the syndicate and did not personally receive any tainted funds. Co-accused allegedly handled transactions and proxies; the applicant's involvement is argued to be remote, Thus, there is no allegation that the applicant himself converted or invested identifiable proceeds of crime into assets. Under the PMLA, one cannot be treated as laundering proceeds unless he "knowingly assists" in dealing with such proceeds. Counsel for the applicant disputes that any link or proceeds has been established and argued that the money found in real estate deals or cash transfers is not shown to have come from a predicate offence committed by him. III. ED Arrests-Custody must be Justified, Not Punitive 16. Learned Senior Counsel submits that the arrest by the ED cannot be used as a punitive measure. Once investigation is substantially....
X X X X Extracts X X X X
X X X X Extracts X X X X
....omatic upon registration of an ECIR or filing of a complaint and that continued incarceration without demonstrable necessity. amounts to pre-trial punishment. IV. Prolonged Incarceration in Ed Cases-Constitutional Safeguard 21. Learned counsel for the applicant submits that prolonged incarceration in ED cases, where trials are inherently protracted strikes at the very root of Article 21. The Apex Court in Manish Sisodia Vs. directorate of Enforcement, (2024) SCC OnLine SC, granted bail under the PMLA holding that "When the accused has undergone substantial incarceration and the trial is unlikely to conclude soon, continued detention is unjustified." The prolonged pre-trial incarceration with no trial commenced deprived the accused of his "right to speedy trial" which is a facet of Article 21. Similarly, in Union of India Vs. K.A. Najeeb (2021) 3 SCC 713, the Apex Court held that Constitutional Courts are empowered to grant bail even in stringent statutes where delay in trial results in prolonged custody. It has been argued that the same principle applies here that the trial has not yet begun despite significant time in custody, warranting bail in the interest of justice. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... investigation would amount to pre-trial punishment which is impermissible in law. VII. Protracted Trial And Structural Impossibility Of Early Conclusion 27. Learned counsel for the applicant submits that the present case is a class illustration of a prosecution where trial is structurally incapable of being concluded within any reasonable time frame. The PMLA proceedings alone involve 21 accused persons, 64 witnesses and more than 325 documents running into several thousands of pages. As per the admitted position of the Enforcement Directorate, investigation is still stated to be ongoing. 28. More significantly, the predicate offence itself involves 51 accused, 1110 witnesses and 990 documents, rendering the conclusion of the trial in the scheduled offence a virtual impossibility in the near future. It is now settled law that the trial under the PMLA cannot be concluded before the conclusion of the trial in the predicate offence. This legal position stands conclusively affirmed by the Apex Court in V. Senthil Balaji Vs. State (2024) 3 SCC 51. In light of this admitted factual matrix, continued incarceration of the applicant would amount to indefinite pre-trial detention, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... ED, 2025 Scc OnLine Del 6237 * Chandra Prakash Khandelwal Vs. ED, 2023 SCC OnLine Del 1094 * State of MP Vs. Sheetla Sahai (2009) 8 SCC 617 IX. Further Investigation without permission of Court. 33. All prosecution complaints filed by the ED record that further investigation is pending, yet no permission of the Special Court was ever sought, as mandatorily required. This Court in Cr.M.P. No. 2056/2025 has categorically held that : No permission for further investigation was obtained; Such irregularity is a relevant factor for grant of bail. The legal position that no further investigation can be conducted by the ED without prior permission of the Special Court stands settled by : * Vijay Madanlal Choudhary Vs. Union of India (2023) 12 SCC 1 * Bhupesh Kumar Baghel Vs. ED WP No. 301/2025 dated 11.08.2025. The filing of repeated supplementary complaints without satisfying the narrow exception laid down in Pramatha Nath Talukdar Vs. Saroj Ranjan Sarkar, 1961 SCC OnLine SC 155 further weakens the prosecution case. X. No Recovery of Proceeds of Crime from the Applicant 24. Search was conducted under Section 17 of the PMLA on 10.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the applicant appears to be indirect and inferential, flowing from alleged association rather than from demonstrable acts of commission or direct handling of proceeds of crime, the evidentiary value of which is a matter for trial. Thus, on a holistic and cumulative consideration of the factual matrix, settled legal principles and constitutional imperatives, the applicant has made out a strong case for grant of bail, even within the rigours of the PMLA. SUBMISSION ON BEHALF OF THE ED 37. Mr. Hossain, learned counsel for the ED has placed on record a comprehensive array of evidence against the applicant including : Section 50 statements: Recorded confessional and narrative statements of multiple witnesses (summoned under Section 50 PMLA) implicating the applicant in handling proceeds of crime. (Apex Court has affirmed that such statements are admissible and can furnish a prima facie case.) Digital and Financial Data: Forensic analysis of Whatsapp chats and other electronic records revealing communications about illicit fund movements, as well as bank and real estate transaction documents evidencing extensive cash flows and layering of funds. Projectiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e rigours of Section 45 must be applied, regardless of how bail is sought. Given the enormous stakes (Rs. 1000 + crores allegedly laundered here) this court must be cautious. * Burden on Accused : The onus is on the applicant to satisfy these conditions. The accused must prima facie prove innocence and no risk of re-offence (and this can be discharged only on probabilities). In Tarun Kumar, the SC has specifically noted that if statements and documents on record strongly implicate the accused, he has "failed to meet the threshold stipulations" of proving he is not guilty and not likely to offend. 39. He therefore submits that applying these principles, the applicant plainly fails to satisfy Section 45. First there is no prima facie case of innocence. The evidence including multiple Section 50 statements and financial records, points strongly to the applicant's involvement in processing illicit funds. As in Tarun Kumar where such material was held sufficient to show the role of the accused in the laundering cycle, the same conclusion holds here: the ED's evidence on record casts clear suspicion on the applicant. He has neither disproved nor explained these charges co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....43. It contends that the applicant "sponsored" key appointments (in the Chhattisgarh State Marketing Corporation) and oversaw commission-collection schemes, making him a kingpin rather than a mere minor conspirator. The money laundering is not an ordinary offence but an aggravated economic crime having serious ramifications on the financial integrity of the nation. He further submits that the applicant was not a peripheral participant but was the apex of the syndicate, exercising supervisory control over the flow and deployment of illicit funds. 44. He further argued that the seriousness of the alleged offence and the imperatives of effective investigation weight decisively against enlargement of the applicant on bail. Money Laundering at this scale is extraordinary; PMLA offences are "aggravated" crimes. Granting bail in such cases is contrary to legislative intent. Moreover, the ED asserts that the applicant's continued custody is necessary to trace further actors in the syndicate and recover proceeds. Indeed, even procedural history shows caution: The co-accused has also had his bail application dismissed on 20.06.2025 and on an almost identical record confirms the appropriat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....during trial; or file a fresh complaint against a person not previously arraigned; or request the Court to proceed against such person under Section 319 Cr.P.C. (now corresponding provision under BNSS). 49. He further contended that it is a settled proposition of law that trial commences only after framing of charges and not prior thereto. In the present case, it is an admitted position that charges have not yet been framed and therefore the trial has not commenced. Consequently, the submission that prior permission of the Special Court was mandatory at the present stage is legally unsustainable. The statutory recognition of further investigation even after filing of final report is well settled under Section 173(8) Cr.P.C. which has been consistently interpreted by the Apex Court. In State of A.P. Vs. A.S. Peter (2008) 2 SCC 383, the Apex Court has categorically held as under: "Indisputably, the law does not mandate taking of prior permission from the Magistrate for further investigation. Carrying out of further investigation even after filing of the charge sheet is a statutory right of the police." 50. The discretion between further investigation and re-investigati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting, thereby fulfilling the statutory mandate. The ED asserts that the formation of "reason to believe" is based on objective material and not on mere suspicion and conjecture. The custodial interrogation was necessary to unravel the complex web of financial transactions, trace the proceeds of crime, identify the role of other conspirators and prevent destruction or concealment of evidence. The gravity and magnitude of the offence, involving large scale laundering of proceeds of crime, justify the exercise of the power of arrest. 55. It is contended that non-issuance of summons under Section 50 prior to arrest does not vitiate the arrest, an issuance of summons is not a mandatory precondition for invoking Section 19. It is submitted that the apprehension of tampering with evidence and influencing witnesses cannot be ruled out if the applicant is enlarged on bail at this stage and thus, the arrest is neither arbitrary nor punitive but a legitimate exercise of statutory power in furtherance of effective investigation under the PMLA. 56. The Directorate of Enforcement, in its prosecution complaints and supplementary complaints filed in connection with ECIR/RPZO/04/2024, has all....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rial placed on record reveals the following facts: I. Judicial Principles for consideration of bail under the PMLA 60. This Court, before adverting to the facts of the present case, deems it apposite to reiterate the settled parameters governing the grant of bail under the Prevention of Money Laundering Act, 2002. Undoubtedly, the statute incorporates stringent conditions; however, stringency of a statutory regime cannot be read as a license to disregard constitutional safeguards. The Apex Court in Satender Kumar Antil Vs. CBI (2022) 10 SCC 51, has held that even in cases involving special statutes, deprivation of liberty must satisfy the test of necessity and proportionality and that arrest and incarceration cannot be resorted to as a matter of course. 61. Similarly, in Sanjay Chandra Vs. CBI (2012) 1 SCC 40, it has been held that the object of bail is to secure the presence of the accused at trial and not to inflict punishment prior to conviction. In Manish Sisodia Vs. Directorate of Enforcement (2024) 2 SCC 349, has consistently held that the jurisdiction at the stage of bail is guided by the principles of necessity, proportionality and fairness and not by punitive cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....afeguards under the Act cannot be reduced to empty formalities and must operate in substance. The complete omission to invoke Section 50 prior to arrest, when viewed in conjunction with the facts and circumstances of the present case, assumes relevance at the stage of bail, though it may not, by itself, invalidate the arrest. 65. At the outset, it must be reiterated that bail jurisprudence under the PMLA, though undoubtedly stringent, is not intended to eclipse constitutional guarantees, nor to legitimize incarceration by default. The rigour of Section 45 of the PMLA, however strict, does not oust the jurisdiction of constitutional courts to protect personal liberty where continued detention becomes disproportionate, punitive or unjust. The satisfaction contemplated under Section 45 of the PMLA is prima facie in nature, and not a determination of guilt. The legal position stands conclusively settled by the Constitution Bench in Vijay Madanlal Choudhary Vs. Union of India (2022) 10 SCC 386, wherein it was held that the Court at the stage of bail, is required only to assess whether reasonable grounds exist for believing that the accused is not likely to be guilty and not to conduc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounds recorded by the Investigating Officer. Nevertheless, a mere erroneous reference to non-co-operation, by itself, would not render the arrest illegal though it may constitute a procedural lapse amounting to an irregularity rather than an illegality. The arrest, as asserted was ultimately based on the subjective satisfaction of the Investigating Officer, purportedly formed on the basis of material already available with the Enforcement Directorate. 70. It is also contended that the further investigation carried out by the Enforcement Directorate was undertaken without prior permission of the competent Court. The custodial arrest of the petitioner was effected after a lapse of nearly four months without any disclosure of fresh incriminating material having been collected during the intervening period. In the circumstances where the alleged involvement of the petitioner had already crystallized earlier, the subsequent arrest, delayed and unexplained, is asserted to be legally impermissible. Though the procedure under Sections 200 to 204 Cr.P.C. governs proceedings under the PMLA and not Section 173 Cr.P.C, the delay in effecting arrest and the absence of prior judicial sanction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zed to file a fresh complaint against the person who has not been named as accused in the complaint already filed in respect of same offence of money-laundering, including to request the Court to proceed against such other person appearing to be guilty of offence under Section 319 of the 1973 Code, which otherwise would apply to such a trial." 72. It has been emphasized that the primary objective of any further investigation is to uncover the truth and ensure justice is served. In the context of the PMLA, the Apex Court has held that the ED retains the statutory authority to conduct further investigation even after filing of the prosecution complaint. This authority is subject to the safeguards enshrined in the statute and must be exercised in accordance with the principles of fairness and reasonableness. 73. From perusal of the grounds of arrest, it is evident that the arrest of the applicant is substantially based upon material already collected during investigation, including statements recorded under Section 50 of the Act and documentary evidence. No specific circumstance has been pointed out which necessitated the immediate arrest of the applicant at that stage, nor has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction of the Special Court while dealing with the offence being tried under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trials. This, in fact, is reiteration of the earlier part of the same section, which envisages that even though both the trials may proceed before the same Special Court, it must be tried separately as per the provisions of the 1973 Code. Insofar as clause (ii) of the Explanation, at the first glance, it does give an impression that the same is unconnected with the earlier part of the section. However, on closer scrutiny of this provision, it is noted that the same is only an enabling provision permitting to take on record material regarding further investigation against any accused person involved in respect of offence of money laundering for which complaint has already been filed, whether he has been named in the complaint or not. Such a provision, in fact, is a wholesome provision to ensure that no person involved in the commission of offence of money laundering must go unpunished. It is always open to the authority authorise....
X X X X Extracts X X X X
X X X X Extracts X X X X
....spect of Mr. Lakshmi Narayan Bansal, although the record indicates that the warrant of arrest issued against him remains unexecuted the mere non-arrest of a co-accused by itself does not establish mala fides or illegality in the proceedings initiated against the present applicant. At best, such circumstance may amount to an irregularity; however an irregularity of this nature does not ipso facto vitiate the entire proceedings. 80. Further under Section 70 of the Cr.P.C and Section 72 of the BNSS 2023, the law prescribes the form of warrant and duration of arrest, leaving no scope for selective or discretionary non-compliance when a judicial warrant has been issued. Section 72 (2) of the BNSS provides as under: "every such warrant shall remain in force until it is either canceled by the court that issued it or it is executed, meaning the person is arrested. This provision ensures a warrant is valid indefinitely until one of these two events occurs." It emerges from the record that the competent Special court in E.O.W./liquor scam case has declared Mr. Lakshmi Narayan Bansal as absconding and, accordingly, issued a permanent warrant of arrest on 19.05.2025 which remain....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting authority has followed a "pick and choose" approach by consciously refraining from arresting those individuals who were fully aware of the source of the illicit funds actively facilitated the laundering process by arranging mule accounts and played a central and pervasive role at every stage of the alleged conspiracy .Despite such grave and foundational allegations, those individuals have not been subjected to custodial arrest. 85. It is thus contended that denial of bail to the applicant, in the face of non-arrest of a co-accused whose role is projected as more significant and culpable, would amount to discriminatory application of the coercive powers of arrest and would render the exercise of such power arbitrary and unjust. V. Findings on Parity with Co-accused 86. It is borne out from the record that several co-accused including Anil Tuteja, Arun Pati Tripathi, Trilok Singh Dhillon, Anwar Dhebar and Arvind Singh, who are the kingpins and key conspirators of the syndicate-who constitute the principle accused in the matter have already been enlarged on bail by the Apex Court. The role attributed to the present applicant is not shown to be severe or qualitatively dif....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers' correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, deleve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the for witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecutio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that the proceedings under the PMLA alone involved as many as 21 accused persons, hundreds of witnesses and several hundred documents running into thousands of page. Even as of date, the ED itself maintains that the investigation has not yet attained finality. 94. The complexity of the matter is further compounded by the fact that the predicate offence encompasses an even larger evidentiary canvas, involving an extraordinary volume of material, numerous accused and a vast array of witnesses. In such circumstances,it would be wholly unrealistic to expect that the trial, either in the scheduled offence or the PMLA proceedings would conclude in the near future. It is now well settled that a trial under the PMLA cannot logically or legally be concluded prior to the culmination of the trial in the predicate offence. This legal position stands conclusively affirmed by the Apex Court in V. Senthil Balaji Vs. State (2024) 3 SCC 51. The inevitable consequence is that continued incarceration of the applicants would amount to prolonged and indeterminate pre-trial detention. 95. In cases such as the present, where there are multiple accused, voluminous evidence to be appreciated, score....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... (ii) Reasons are indispensable to the proper functioning of the machinery of criminal law. They form the bedrock of fairness, transparency, and accountability in the justice system. If the Court finds or the accused alleges (obviously with proof and reason to substantiate the allegation) that there is a large gap between the first information report and the culminating chargesheet, it is bound to seek an explanation from the investigating agency and satisfy itself to the propriety of the explanation so furnished. The direction above does not come based on this case alone. This Court has noticed on many unfortunate occasions that there is massive delay in filing chargesheet/taking cognizance etc. This Court has time and again, in its pronouncements underscored the necessity of speedy investigation and trial as being important for the accused, victim and the society. However, for a variety of reasons there is still a lag in the translation of this recognition into a reality. (iii) While it is well acknowledged and recognised that the process of investigation has many moving parts and is therefore impractical to have strict timelines in place, at the same ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....luence, though noted, cannot be accepted as a standalone ground to deny bail in the absence of specific material demonstrating actual attempts at witness intimidation or obstruction of justice. Apprehensions, howsoever grave, must be founded on tangible material and not on conjecture. It is also material to note that multiple prosecution complaints have already been filed and the documentary and digital evidence stands secured. In such circumstances, the possibility of tampering with evidence stands significantly diminished. 101. This Court is conscious of the gravity of offences under the PMLA and the deleterious impact of money laundering on the financial health of the nation. However, severity of allegations cannot, by itself, become a justification for perpetual incarceration, particularly when the adjudicatory process is bound to take years. The criminal justice system does not countenance a regime where detention becomes the rule and trial the exception. Such an approach would reduce the concept of bail to a mere illusion and render Article 21 a dead letter. 102. The contention of the ED that parity is wholly inapplicable has been duly considered. While it is correct th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or fresh incriminating material, would run contrary to the settled principles governing bail jurisprudence. 106. The principle of parity which is a facet of Article 14 of the Constitution and a well recognized cannon of bail jurisprudence, mandates that similarly situated accused persons ought not to be subjected to disparate standards of treatment in matters affecting personal liberty. Once the Apex court has delineated the contours within which investigation against a co-accused must be concluded and has envisaged consideration of bail on merits thereafter this Court would be failing in its constitutional duty if the present applicant-standing on lesser footing is denied the same normative protection. 107. It is trite law that parity does not demand mechanical replication of orders; however, it does require the Court to ensure consistency in judicial approach, unless distinguishing circumstances of a compelling nature are demonstrated. No such distinguishing material has been placed on record by the respondent to justify a harsher or more restrictive treatment of the present applicant vis-a-vis the said co-accused Anil Tuteja. As per the prosecution case, the alleged kingp....