Patna High Court
Kanhaiya Prasad vs The Union Of India Through The Assistant … on 22 August, 2025
Author: Prabhat Kumar Singh
Bench: Prabhat Kumar Singh
IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.17738 of 2024
Arising Out of PS. Case No.-14 Year-2023 Thana- E.C.I.R (GOVERNMENT OFFICIAL)
District- Patna
======================================================
Kanhaiya Prasad son of Radha Charan Sah R/o- H.No-19, Moh.- East Patel
Nagar Phulwari Sharif Dist- Patna
... ... Petitioner/s
Versus
The Union of India through the Assistant Director, Zonal Office, Enforcement
Directorate, Bank Road, Patna, Bihar
... ... Opposite Party/s
======================================================
Appearance :
For the Petitioner : Mr. Mrigank Mauli (Sr.Adv.)
Mr. Vishal Kumar,
Mr. Amit Anand,
Ms. Naisargika,
Ms. Somya,
Mr. Pankaj Singhal
Mr. Ayush Anand (All Advocates)
For the Opp.party/E.D. : Mr. Tuhin Shankar (Advocate)
======================================================
CORAM: HONOURABLE MR. JUSTICE PRABHAT KUMAR SINGH
C.A.V. JUDGMENT
Date : 22-08-2025
The present application has been filed for grant of
regular bail to the petitioner in connection with Special Trial
(PMLA) Case No. 08/2023, arising out of ECIR No.
PTZO/14/2023 dated 15.03.2023, for offence punishable under
Section 4 of the Prevention of Money Laundering Act, 2002
(hereinafter referred as "PMLA").
2. As per the case of the opposite party /Enforcement
Directorate (for short "E.D."), some 20 F.I.Rs. were registered at
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the various Police Stations at Patna, Saran and Bhojpur Districts
under Sections 38, 120B, 378, 379, 406, 409, 411, 420, 467, 468
and 471 of IPC, and under Section 39(3) of the Bihar Mineral,
(Concession, Prevention of Illegal Mining, Transportation and
Storage) Rule, 2019. It was alleged inter alia that M/s Broad Son
Commodities Private Ltd and its Directors were engaged in illegal
mining and selling of sand without using the departmental pre-paid
transportation E-challan, issued by the Mining Authority Bihar,
and thus had caused revenue loss of Rs. 161,15,61,164/- to the
Government Exchequer. Since the said FIRs contained Scheduled
offences as defined under Section 2(1)(y) of the PMLA, an ECIR
bearing No. ECIR/PTZO/14/2023 dated 15.03.2023, addendum
ECIR No. ECIR/PTZO/14/2023 dated 08.11.2023 and dated
04.05.2024
came to be registered, and the investigation for the
offences of Money Laundering was initiated.
3. During the course of investigation and pursuant to the
information made available, search operations were carried out
under Section 17 of PMLA at the various locations and premises
related with the said Company and its Directors, including four
premises of Radha Charan Sah (father of the petitioner). During
the course of inquiry, the statements of the petitioner-Kanhaiya
Prasad, being son of the co-accused Radha Charan Sah came to be
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recorded on 01.09.2023 and 04.09.2023 under Section 50 of the
PMLA.
4. The Opposite Party/E.D., upon scrutiny of statement
of the co-accused persons (Directors of M/s. Broadson
Commodities Pvt. Ltd.), observed that the father of the petitioner
is a syndicate member and holds 20% share in the profit. On the
basis of the documents received from the Income Tax Department,
which is alleged to be seized by the Income Tax Department from
the premises of the father of the petitioner, it is alleged that this
petitioner received cash generated by illegal sale of sand without
using departmental Challans. It is further alleged that this
petitioner has assisted the co-accused Radha Charan Sah in
layering and laundering of proceeds of crime generated out of the
illegal sale of sand. Thus, it is alleged that this petitioner concealed
the proceeds of crime by way of purchasing properties, carrying
out renovation and construction work in the family owned trust
property by using the said proceeds of crime.
5. On the basis of the aforesaid allegations and facts, as
stated in the complaint petition, Special Trial (PMLA) Case No. 08
of 2023, arising out of ECIR No. PTZO/14/2023 dated 15.03.2023,
has been lodged alleging offences under Section 4 of the PMLA.
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6. Mr. Mrigank Mauli, learned senior counsel appearing
on behalf of petitioner submits that the present PMLA prosecution
is concerned, it is premised on a total of 20 FIRs. that were
registered by the Mining Authorities in the districts of Patna,
Bhojpur (Ara), and Saran against the company, M/s. Broadson
Commodities Pvt. Ltd. and its Directors. Petitioner was neither
named nor arrayed as an accused in any of the 20 FIRs forming the
foundation of the present PMLA prosecution. Out of these 20
FIRs, only 7 presently subsist, while the remaining have either
been quashed by this Hon’ble Court or culminated in the
submission of final reports. Consequently, the very substratum of
the instant ED case no longer survives. With respect to the pending
predicate FIRs, it is pertinent to note that, except for one, no
charge-sheet has been filed in any of them despite their registration
nearly 4-5 years ago.
7. Learned senior counsel further submits that petitioner
is a law-abiding citizen and unnecessarily drawn into the present
PMLA proceedings on unfounded allegations of layering proceeds
of crime, allegedly generated by his father from the profits of sand
mining undertaken by M/s Broadson Commodities Pvt. Ltd.,
purportedly as part of a syndicate. It is significant to note that
petitioner’s father has already been granted bail by a coordinate
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Bench of this Hon’ble Court, vide order dated 03.07.2024 passed
in Cr.Misc. No. 15740 of 2024 (Radha Charan Sah v. Union of
India), which was subsequently affirmed by the Hon’ble Supreme
Court, vide order dated 21.04.2025 in Criminal Appeal No. 2067
of 2025 {arising out of SLP (Crl.) No. 5952 of 2025, Union of
India v. Radha Charan Sah}. Even assuming, without admitting,
that any alleged wrongful gain accrued to M/s Broadson
Commodities Pvt. Ltd., resulting in loss to the government
exchequer, the liability, if any, would attach only to the said
company as a distinct legal entity, and at most, to its directors, not
to the petitioner, who has neither any proven role nor nexus
therein. There exists no material on record to demonstrate the
presence of any syndicate, much less to establish that the petitioner
was a member thereof. As settled in criminal jurisprudence,
criminal liability cannot be imposed merely on conjectures,
surmises, or presumptions, particularly at the stage of
consideration of bail.
8. Learned senior counsel for the petitioner further urged
that it is alleged in the complaint petition that petitioner’s father is
the member of the syndicate member of the sale of sand of M/s
Broadson Commodities Pvt. Ltd., which allegedly led to
generation of funds and those funds were allegedly managed by
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petitioner. The basis of the allegation is the seizure of certain
ledgers of M/s Broadson Commodities Pvt. Ltd. from the premises
of the petitioner’s father during an Income Tax search conducted
during February 2023 under Income Tax Act. However, it is
pertinent to mention here that the said premises had been rented to
one Ashok Kumar, who was Director of M/s Broadson
Commodities Pvt. Ltd., which is evident from the correspondence,
addressed to him, at that very location. The mere recovery of such
documents from a rented premises cannot, by any stretch,
implicate this petitioner.
9. So far as excess income alleged against this petitioner
is concerned, learned senior counsel for the petitioner submits that
sources of those income are from the legitimate business of the
petitioner and petitioner had already disclosed the same before the
Income Tax Department, vide letter dated 24.05.2023, much prior
to the issuance of the first summon by the Enforcement
Directorate. Pursuant to a comprehensive assessment, the Income
Tax Authorities, by a detailed order dated 31.03.2024,
unequivocally held that such income had arisen from petitioner’s
lawful business operations, albeit with instances of inflated billing,
and accordingly assessed the same. The petitioner has duly
discharged from his tax liability. Therefore, prima facie, no
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“proceeds of crime”, as alleged by the opposite party/E.D., can be
attributed to this petitioner, since the disclosed income bears no
nexus whatsoever with the business operations of the accused
company. What the petitioner possesses is income derived from
lawful business activities, and not proceeds of crime, as alleged by
the Enforcement Directorate.
10. He further submits that with regard to the alleged
sum of 5.36 crores linked to the MSD School at Ghaziabad, no
show-cause notice was ever issued to the petitioner. Such notice
was, instead, directed to co-accused person which fact is
substantiated by the statement of Sudama Kumar, employee of
Ashok Kumar (one Director of the company), recorded before the
Income Tax Department. Both Sudama Kumar, in his deposition
before the ED, and Ashok Kumar, in his statement dated
18.03.2023 before the Income Tax Authority have categorically
stated that the petitioner had no connection with the said funds.
Indeed, even the prosecution Complaint acknowledges that the
sum was utilized by co-accused Radha Charan Sah and Ashok
Kumar, not this petitioner. This itself demolishes the allegation
against this petitioner.
11. Further, on the allegation regarding petitioner’s
father holding shares in M/s Broadson Commodities Pvt. Ltd., as
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part of an alleged “syndicate,”, learned senior counsel humbly
submits that this assertion is wholly unsubstantiated. It rests
merely on statements under Section 50 of the PMLA, including
from co-accused persons, without any corroborative material. In
support of this submission, he relies upon a judgment of Hon’ble
Supreme Court in the case of Prem Prakash v. Enforcement
Directorate, reported in (2024) 9 SCC 787. The account
statements of Broadson Commodities clearly reveal that there were
no financial dealings whatsoever with either the petitioner or his
father. In fact, even if it is assumed that M/s Broadson
Commodities Pvt. Ltd. engaged in illicit sand mining, there is no
evidentiary trail linking such alleged proceeds to the petitioner and
in absence of same, any presumption of his involvement is
speculative and unsustainable in law.
12. Learned senior counsel for the petitioner further
submits that R.K. Patania, proprietor of R.K. Patania & Co., who
has been the statutory auditor of M/s Broadson Commodities Pvt.
Ltd. for over a decade, in his sworn deposition dated 24.05.2023
under Section 131(1A) of the Income Tax Act, unequivocally
stated that neither the petitioner nor his father had any association
with the said company and its business transactions. He
categorically denied any knowledge of the documents allegedly
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seized from the premises of the father of the petitioner and
produced audited reports for FY 2015-16 to 2021-22, none of
which reflects any involvement of the petitioner or his family in
the business of the accused company. He reiterated the same in his
multiple appearances before the ED under Section 50 of the PMLA
in October and December 2023. This independent evidence
entirely discredits the ED’s allegation.
13. With respect to the petitioner’s investment of around
₹2.5 crores in Ganinath Ventures LLP, learned senior counsel
submits that the LLP, incorporated on 15.02.2017 under LLPIN
AAI-5701 and registered with the Ministry of Corporate Affairs,
comprises 142 partners with a total corpus of ₹7 crores. The
petitioner, being one of the two designated partners, made his
contribution in strict conformity with the LLP Agreement executed
in 2017, and the entity has been engaged in legitimate business of
civil contracting and supply of construction material. All
contributions, including that of the petitioner, have been duly
disclosed and income tax returns filed. The ED’s allegation that
such investment is tainted is wholly baseless and contrary to
record.
14. He further submits that the ECIRs in question are
based on several FIRs, of which, only two FIR i.e. FIR No. 109/17
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dated 05.04.2017 and FIR No. 523/17 dated 31.07.2017, predate
the construction of the petitioner’s properties. Significantly, no
chargesheet has been filed even in these two FIRs despite lapse of
nearly nine years. Thirteen predicate FIRs cited by the ED stand
either quashed or concluded by final form. As it is laid down at
para no. 253 in Vijay Madanlal Choudhary vs. Union of India
through E.D. reported in 2022 SCC OnLine 929, existence of a
subsisting predicate offence is sine qua non for the very
foundation of proceeds of crime. In the present case, the absence
of any live predicate offence and the temporal disconnect of the
FIRs with the Petitioner’s investments render the entire
proceedings legally untenable. While considering applications for
grant of bail, the Court is required to form only a prima facie view
and is not expected to meticulously weigh the evidence for the
purpose of drawing inferences under the twin conditions stipulated
in Section 45 of the PMLA.
15. He further submits that even, while dealing with bail
under a special legislation such as the PMLA, governed by Section
45, the Hon’ble Supreme Court has unequivocally held that the
rigors of the statute must be harmonized with the constitutional
guarantees enshrined under Article 21. It has been consistently
observed by the Supreme Court that while adjudicating bail, even
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under the PMLA, the Court is duty-bound to give due
consideration to the fundamental right to life and personal liberty
and the right to a speedy trial.
16. Learned senior counsel next submits that in this case,
petitioner has remained in custody from 18.09.2023 to 15.05.2024
and thereafter, since 19.02.2025, he is in custody and thus, has
completed about 15 months, as an under-trial prisoner. The
Hon’ble High Court has quashed the FIRs and few FIRs are closed
by the investigating authorities. In remaining FIRs, charge sheet
has not yet been filed. The prosecution has cited 56 prosecution
witnesses and the documents are running into more than 4000
pages. Further, prosecution complaint was filed on 9th November,
2023 and still charges have not been framed. In this regard, he has
relied upon paragraphs 49, 50, 53 and 54 of judgment of Hon’ble
Supreme Court in the case of Manish Sisodia v. Directorate of
Enforcement, reported in 2024 SCC OnLine SC 1920. Similarly,
he has also placed reliance on Ramkripal Meena’s case, reported
in 2024 SCC OnLine SC 2276, wherein Hon’ble Supreme Court
has observed following in paragraph – 7:-
“7. Adverting to the prayer for grant of
bail in the instant case, it is pointed out by learned
counsel for ED that the complaint case is at the
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proposed to be examined. The conclusion of
proceedings, thus, will take some reasonable time.
The petitioner has already been in custody for more
than a year. Taking into consideration the period
spent in custody and there being no likelihood of
conclusion of trial within a short span, coupled with
the fact that the petitioner is already on bail in the
predicate offence, and keeping in view the peculiar
facts and circumstances of this case, it seems to us
that the rigours of Section 45 of the Act can be
suitably relaxed to afford conditional liberty to the
petitioner. Ordered accordingly.”
17. Besides above, learned senior counsel has also
placed reliance on different paragraphs of V. Senthil Balaji v.
DoE, reported in 2024 SCC OnLine 2626.
18. Learned senior counsel for the petitioner next
submits that as far as statement of the petitioner recorded during
custody is concerned, such statements cannot be used against the
petitioner and as far as the statement of co-accused against the
petitioner is concerned, they do not bear/hold substantive evidence
against the petitioner and may not be considered while
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consideration the bail application of the petitioner. In this regard,
reliance can be placed on paragraph nos. 13, 14, 15, 21, 22, 23, 27,
30, 32 and 34 of Prem Prakash v. Enforcement Directorate,
reported in (2024) 9 SCC 787.
19. He further submits that investigation against the
petitioner is complete and prosecution complaint dated 10.11.2023
pursuant to the completion of investigation has been filed
therefore, custodial interrogation of the petitioner is not required.
In this regard, reference can be made to Para 39, 40, 46 of Sanjay
Chandra Vs. Central Bureau of Investigation reported in (2012)
1 SCC 40 and Para 86, 89 of the case of Satendra Kumar Antil
Vs. Central Bureau of Investigation reported in (2022) 10 SCC
51.
20. He further submits that petitioner has consistently
demonstrated good conduct. He scrupulously complied with all
bail conditions earlier imposed, surrendered before the Learned
Special Judge on 19.02.2025 in adherence to the Hon’ble Supreme
Court’s order, and has neither tampered with evidence nor
influenced witnesses. He thus satisfies the “triple test/tripod test”
for bail, viz. (i) not being a flight risk, (ii) not tampering with
evidence, and (iii) not influencing witnesses, as reiterated at para
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(2019) 9 SCC 24.
21. He next submits that the Hon’ble Supreme Court, in
a catena of recent decisions as elucidated above, has observed that
the rigors of Section 45 of PMLA must be harmonized with
constitutional guarantees, especially Article 21, taking into account
factors such as prolonged incarceration, the stage of trial, and the
conduct of the accused. The present case squarely falls within that
category, making continued detention of the petitioner legally
untenable.
22. He, therefore, submits that in the facts and
circumstances of the present case, the petitioner is entitled to be
released on regular bail, as no prima facie offence is made out
against him and the twin conditions under Section 45 of the PMLA
stand fully satisfied. The investigation insofar as it concerns the
petitioner is complete; the prosecution complaint dated 10.11.2023
has already been filed, and all co-accused named therein have been
granted bail. Charges, however, are yet to be framed. With respect
to the predicate FIRs, the trial has not even commenced. The
prosecution has cited as many as 56 witnesses and relied upon
voluminous records exceeding 3,500 pages, rendering the
conclusion of trial in the near future highly improbable. The
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petitioner has already undergone nearly 15 months of incarceration
as an under-trial and in view of these circumstances, coupled with
the settled principles of law, as discussed above, and the
fundamental right to personal liberty enshrined under Article 21 of
the Constitution of India, the petitioner deserves to be enlarged on
bail.
23. On the other hand, Mr. Tuhin Shankar, learned
counsel appearing on behalf of opposite party / E.D. vehemently
opposed the bail petition and submitted that registration of FIR in
the predicate offence is merely a condition precedent for
commencement of investigation under PMLA, however it is not
necessary that every person, who is arrayed as accused in offence
of money Laundering, should also be an accused in the predicate
offence, and as such, attention is drawn to the observation made by
the Hon’ble Supreme Court in paragraph 15 of the case of Pavana
Dibbur vs Directorate of Enforcement in Criminal Appeal
no.2779 of 2023 wherein the Court has observed following:
“15. Coming back to Section 3 of the
PMLA, on its plain reading, an offence under
Section 3 can be committed after a scheduled
offence is committed. For example, let us take the
case of a person who is unconnected with the
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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. To give a concrete example,
the offences under Sections 384 to 389 of the IPC
relating to “extortion” are scheduled offences
included in paragraph – 1 of the Schedule to the
PMLA. An accused may commit a crime of
extortion covered by Sections 384 to 389 of IPC and
extort money. Subsequently, a persons unconnected
was the offence of extortion may assist the said
accused in the concealment of the proceeds of
extortion In such a case, the person who assists the
accused in the scheduled offence for concealing the
proceeds of the crime of extortion can be guilty of
the offence of money laundering. 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. What is held in paragraph 270 of
the decision of this Court in the case of Vijay
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conclusion. The conditions precedent for attracting
the offence under Section 3 of the PMLA are that
there must be a scheduled offence and that there
must be proceeds of crime in relation to the
scheduled offence as defined in clause (u) of
subsection (1) of Section 3 of the PMLA.”
24. In this regard, learned counsel for the E.D. has
submitted that the independent nature of the offence of money
laundering and its connection to scheduled offences was explained
by the Hon’ble Supreme Court in the case of Vijay Madanlal
Choudhary & Ors. v Union of India reported in 2022 SCC
OnLine SC 929, wherein paragraph 42 reads thus:
“42. From the bare language of Section 3
of the 2002 Act, it is amply clear that the offence of
money-laundering is an independent offence
regarding the process or activity connected with the
proceeds of crime which had been derived or
obtained as a result of criminal activity relating to or
in relation to a scheduled offence. The process or
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concealment, possession, acquisition, use of
proceeds of crime as much as projecting it as
untainted property or claiming it to be so. Thus,
involvement in any one of such process or activity
connected with the proceeds of crime would
constitute offence of money laundering. This offence
otherwise has nothing to do with the criminal
activity relating to a scheduled offence – except the
proceeds of crime derived or obtained as a result of
that crime.”
25. He has further submitted that recently, the Hon’ble
Telangana High Court, in the case of Vem Krishna Keerthan vs
Directorate of Enforcement, Criminal Petition No.9314 of
2022, while dealing with a similar question of law has observed
following in paragraph – 46:
“46. The petitioner also contended that as
the proceedings in the predicate offence are stayed
by the Supreme Court, the proceedings under the
PMLA shall also be stayed. The said contention
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Chaudhary (supra), unless the accused in the
scheduled offence “is finally absolved by a court of
competent jurisdiction owing to an order of
discharge, acquittal or because of quashing of the
criminal case”, the offence of money laundering is
maintainable. In the present case, the proceedings in
the predicate offence are merely stayed and such a
stay cannot be extended to the proceedings under the
PMLA”
26. It has been further argued by the learned counsel for
E.D. that the investigations against petitioner have revealed that
the petitioner concealed proceeds of crime by way of carrying out
constructions in his family owned trust’s property, carrying out
renovation in the resort owned by a company where he and his
brothers are Directors and by investing it through third parties in
LLP where he and his brother are partners, therefore, he is in
possession of proceeds of crime. Thus, he is found to be directly
involved in concealing the proceeds of crime generated from the
activities related with the scheduled offence and is guilty of the
offence of the money laundering.
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27. It is further contended that petitioner’s father Radha
Charan Sah has acquired Mastiff Grand Manali Resort, Manali
valued at Rs. 20.92 Crore (total value of resort) in the name of
firm called Intercontinental Resort Pvt. Ltd where his sons viz.
Kanhaiya Prasod, Satendra Kumar and Basuki Nath Prasad are the
share-holders. For the acquisition of the said resort in Manali,
Radha Charan Sah routed cash of Rs. 8.93 Crore from his family
members personal Bank Account and family owned LLP’s account
to the bank account of Maa Sharda Devi Buildings and
construction, which was later used to acquire the said resort.
Satendra Kumar (brother of petitioner) has stated in his statement
recorded under Section 50 of PMLA that entire work of family
owned LLP and of Maa Sharda Devi Buildings and Construction
was handled by Kanhaiya Prasad. Both of these entities were used
by Kanhaiya Prasad to route the proceeds of crime generated by
his father to portray it as untainted. Kanhaiya Prasad also
transferred Rs. 11,90,00,000/- cash received from his father
through Hawala channel for further renovation of the said resort.
Radha Charan Sah also carried out constructions worth Rs. 5.36
Crore in MSD World School run by his family owned trust Kamla
Aggarwal Educational Society, Ghaziabad wherein he and his
family members are trustees. Thus, this Rs. 8.93 Crore, Rs. 11.90
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Crore, and 5.36 Crore cash used for acquisition of resort in Manali,
carrying out renovation in the said resort, and carrying out
construction in school respectively are nothing but proceeds of
crime generated by Radha Charan Sah being a syndicate member
in M/s. Broad Son Commodities Private Limited. These properties
owned by the firm/trust which are actually controlled by the family
members of Radha Charan Sah are used in concealing the proceeds
of crime and therefore, are used in commissioning the offence of
Money Laundering under PMLA, 2002. Further, 142 Bank
Counterfoils were recovered from an Almirah in Hotel Regal
which is owned by his father Radha Charan Sah. From those
counterfoils, it is revealed that Rs. 2 Lakh each was deposited in
these 142 persons’ bank account in Bihar Grameen Bank which is
further transferred to the bank account of Ganinath Ventures LLP
in which Kanhaiya Prasad is Director. Further, a WhatsApp
conversation was retrieved from the mobile phone of Kanhaiya
Prasad which was seized during ED search at his premises. In the
said WhatsApp conversation, transaction details of dealing with
PoC amounting to Rs. 11,90,00,000/- has been retrieved. Further,
during the course of investigation, staff of petitioner, working at
Manali Resort admitted to have received funds in cash through
Hawala routes towards renovation of Manali Resorts.
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28. It has been further argued that summonses were
issued to the accused-petitioner to appear before E.D. on
11.09.2023, however he failed to appear on the said date. He was
again issued summon to appear on 12.09.2023. Again he failed to
appear on the given date. The act of not answering the call of
summons clearly shows that the petitioner has not cooperated with
the investigation and thereby attempted to frustrate the
proceedings of investigation under the PMLA, 2002 and on the
basis of material available on record and investigations, the role of
the petitioner in the offence of money laundering was gathered and
accordingly, petitioner was arrested at Enforcement Directorate
Patra Zonal Office, Bihar on 18.09.2023. On production of
accused-petitioner before the Court, vide order dated 22.09.2023,
the custody of petitioner was handed over to the Enforcement
Directorate.
29. Learned counsel for E.D. has further urged that
petitioner has utilized Rs. 11,90,00,000/- in cash to carry out
renovation work in resort purchased by him in Manali. Kanhaiya
Prasad (petitioner), in his statement, stated that the said resort was
purchased by him in partnership with his brothers by purchasing
all the shares of Intercontinental Resort Pvt. Ltd. Further, a
WhatsApp conversation was retrieved from the mobile phone of
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Kanhaiya Prasad (petitioner), which was seized during ED search
at his premise. In the said WhatsApp conversation, he has
exchanged photos of 10 Rs/1 Re. note different dates during March
2020 to February 2021 and other cheque along with the details of
cash transfer amounting to Rs. 10,90,00,000/- on transactions
worth Rs. 19,11,68,000/-. After confrontation of the said
WhatsApp conversation, Kanhaiya Prasad (petitioner) stated that
for the said resort in Manali, Rs. 11.90 Crore was paid in cash
through agent.
30. He has further contended that main purpose of
search by Income Tax department was regarding illegal sale of
sand & illegal sand mining. Income Tax Department has calculated
total revenue loss to the govt. exchequer to the tune of Rs. 940.84
Crores. Thus, the unexplained cash in the hands of the petitioner is
nothing but proceeds of crime from illegal sand mining and illegal
sale of sand. The findings of IT Department regarding illegal sale
of sand and sand mining is corroborated with voluminous records
both digital & physical, seized during the course of search action
by Income Tax Department, however, no finding and evidences
regarding inflation of bill, as claimed by petitioner, found during
income tax raid. Disclosure of unexplained income before Income
Tax Department by the petitioner is after-thought, as the same is
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without supporting evidences. It is also submitted that the alleged
disclosure by the petitioner was not made during the course of
search action on 07.02.2023. The alleged disclosure was made on
23.05.2023 without specifying the heads/source of income so
disclosed and the alleged claim of having undisclosed income
from inflation of bills was made on 24.05.2023, i.e., 3 months later
the search action by IT department. It is pertinent to mention that
the alleged disclosure is without any supportive documents
showing inflation of bills and generation of undisclosed income
from the same. Further, the appraisal report which contain the
findings/outcome of search action by IT department, does not give
any mention regarding the accused and his entities involved in
inflation of bills. Furthermore, during the course of search
proceedings by Income Tax Department no such
records/documents indicating inflation of bills were found and
seized. Whereas huge documentary and digital records containing
the data related with illegal sand mining and sale of sand were
found and seized. In view of the facts mentioned above, it is clear
that the claim of the petitioner having undisclosed income from
inflation of bills is merely an afterthought and without any basis,
hence it is fit to be rejected. The unexplained income in the hands
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of the petitioner and associated entities is nothing but proceeds of
crime.
31. Further, Mr. Tuhin Shankar, learned counsel has also
submitted that Shri Ashok Kumar one of the Directors of M/s
Broadson Commodities Pvt. Ltd., has allegedly disclosed
unexplained income before Income Tax Department, but
subsequently, he retracted the same before Income Tax
Department. It clearly shows that accused person changed his
stand as per his convenience and tried to escape from the clutches
of law.
32. Learned counsel for E.D. further argued that the sum
of Rs. 5.36 crores in cash was utilized in the construction of the
school by Radha Charan Sah and Ashok Kumar, not the petitioner,
it is submitted that this Directorate has leveled up the same
allegation against the petitioner in the prosecution complaint that
petitioner has assisted his father Radha Charan Sah in concealing
proceeds of crime of cash of Rs. 5.36 crore by way of carrying out
constructions in his family owned trust’s property. It is submitted
that Radha Charan Sah carried out constructions worth Rs. 5.36
Crore in MSD World School run by his family owned trust Kamla
Aggarwal Educational Society, Ghaziabad wherein he and his
family members are trustees and the petitioner concealed proceeds
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of crime by way of carrying out constructions in his family owned
trust’s property. These properties owned by the firm/trust, which
are actually controlled by the family members of Radha Charan
Sah, are used in concealing the proceeds of crime generated by
Radha Charan Sah being a syndicate member in M/s Broad son
Commodities Private Limited. Therefore, petitioner concealed
proceeds of crime by way of carrying out constructions in his
family owned trust’s property.
33. During the course of investigation it is revealed that
142 Bank counterfoils were recovered from an almirah in Hotel
Regal, which is owned by Radha Charan Sah. From those
counterfoils, it is revealed that Rs. 2 Lakh each was deposited in
these 142 persons’ bank account in Bihar Grameen Bank. He
stated that, these persons are partners in Ganinath Ventures LLP.
On being asked, why these 142 counterfoils were kept in almirah
of Hotel Regal, he stated that they were kept as a proof of their
investment. He could not give any details about the LLP, its
incorporation, meetings, percentage of shares of partners,
percentage of his own share in the said LLP, etc. He couldn’t give
any details about these 140 partners. From the investigation, it is
revealed that, sons of Radha Charan Sah, Satendra Kumar and
Kanhaiya Prasad (petitioner) are designated partners in Ganinath
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Ventures LLP. Kanhaiya Prasad (petitioner) in his statement dated
26.09.2023 recorded under Section 50 of PMLA, 2022 failed to
identify any of these 140 members. He also failed to provide any
details about the LLP. Further, Satendra Kumar in his statement
dated 17.10.2023 recorded under Section 50 of PMLA. 2022 failed
to identify any of these 140 members. He also failed to provide
any details about the LLP It shows that Radha Charan Sah has
used bank accounts owned by third parties.
34. He has also submitted that investigation revealed
that period for generation of proceeds of crime by illegal sale of
sand is from 2017 till 2021. During this period, Broadson
Commodities Pvt. Ltd. & its syndicate members have generated
proceeds of crime to the tune of Rs. 210.68 crore. From the
documents seized from the premises and FIRs it is revealed that
total proceeds of crime generated by Radha Charan Sah is 20% of
88% share of 210,68,92,651 Rs. 37,08,13,107/- during the period
2017-2021. Hence the averment made by the petitioner that only
02 FIRs were registered prior to the construction and renovation of
the property is irrelevant as the period of generation of proceeds of
crime is 2017-2021. In this regard, he has placed reliance upon a
judgment of Hon’ble High Court of Delhi in the case of Rajinder
Singh Chadha vs Union of India.
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35. Lastly, learned counsel for E.D. humbly submitted
that even though, there is no absolute restraint on grant of bail
when the person is tried for offence of money laundering,
however, the grant of bail is subject to fulfilment of conditions
prescribed under the law, in other words, person should be granted
bail only if the twin conditions stipulated under Section 45 of
PMLA are fulfilled.
36. From the perusal of Section 45 of PMLA, it is clear
that the bail under PMLA is subject to fulfillment of twin-
conditions as prescribed under Section 45 of PMLA. He has
submitted that investigation against petitioner has revealed that he
has generated proceeds of crime and is involved in layering and
laundering the same using hawala network by way of purchasing
properties and carrying out constructions in family owned trust’s
property thereby used the said proceeds of crime and is in
possession of proceeds of crime, hence petitioner has committed
the offence of money laundering punishable under Section 4 of
PMLA.
37. Thus, the Directorate of Enforcement, Patna Zone
has already filed a prosecution complaint in this case, vide PMLA-
SC-No. 08/2023 of 2023 under Sections 3 r/w 4 of the PMI A,
2002 before the learned Special Court (PMLA) on 10-11-2023 and
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the petitioner is arrayed as Accused No. 06 in the same and the
proceeding is at the pre-trial stage i.e. ‘Hearing on Charge’.
Therefore, his presence is required for framing of Charges and also
for conducting trial in this case. If the Petitioner is granted bail at
this stage, he will hamper the commencement of trial in an unjust
manner, his release may make the impact that on the prosecution
witnesses and on the society, likelihood of him tempering with the
evidence and releasing the petitioner on bail may seriously
jeopardize the agency’s efforts in investigating the scam and
securing the extradition of the main accused.
38. Learned counsel for the opposite party / E.D. has
relied upon a judgment of Hon’ble Supreme Court in the case of
Gautam Kundu v. Directorate of Enforcement (Prevention of
Money Laundering Act), in which, Hon’ble Supreme Court has
held that the conditions specified under Section 45 of PMLA are
mandatory and need to be complied with while hearing an
application for bail under Section 439 Cr.P.C. In this context, he
also relied upon a decision of Supreme Court in the case of Tarun
Kumar v. Enforcement Directorate, reported in 2023 SCC
OnLine SC 1486.
39. Lastly, he submits that case of the petitioner cannot
be equated with the case of other accused persons, who have
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already been enlarged on bail, on the ground that the petitioner
was instrumental in actively facilitating the process of money
laundering by utilizing the bank channels and other financial
institutions to conceal the proceeds of crime.
40. Heard the submissions, so advanced by Mr. Mrigank
Mauli, learned senior counsel appearing on behalf of petitioner and
Mr. Tuhin Shankar, learned counsel for opposite party/E.D. and
perused the materials available on record.
41. It is settled law that at the stage of consideration of
application for bail of an accused under the PMLA, the Court has
to see the materials available against the petitioner from the
charge-sheet to form an opinion that there exists reasonable
grounds for believing that the accusation against such a person is
prima facie true. At this stage, the Court is not supposed to weigh
the evidence meticulously, but to arrive at a finding based on broad
probabilities. If a charge-sheet is already filed, the Court has to
examine the material forming a part of charge-sheet for deciding
the issue.
42. The Hon’ble Supreme Court in the case of Vijay
Madanlal Choudhary (supra), while reiterating and agreeing
with the holding in Ranjitsing Brahmajeetsing Sharma vs. State of
Maharashtra held that the Court while dealing with the application
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for grant of bail in PMLA need not delve deep into the merits of
the case and only a view of the court based on the material
available on record is required. It held that the Court is only
required to place its view based on probability on the basis of
reasonable material collected during investigation. The words used
in Section 45 PMLA are “reasonable grounds for believing” which
means that the Court has to see only if there is genuine case
against the accused and the prosecution is not required to prove the
charge beyond reasonable doubt.
43. In view of settled legal proposition, I have to
consider the material placed against the petitioner to form an
opinion that there are reasonable grounds for believing that the
accusation against such a person is prima facie true.
44. Perusal of the chargesheet indicates that the material
relied upon by the opposite party / E.D. against petitioner is in the
form of documents, communications, correspondence letters,
certain ledgers etc., alleged to have been seized/recovered from the
houses of co-accused persons and in none of the documents, there
is any reference about this petitioner.
45. So far as the allegation that M/s Broadson
Commodities Pvt. Ltd. were engaged in illegal mining and selling
of sand without using departmental Challan and thereby caused
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revenue loss of Rs. 161,15,61,164/- to the Government Exchequer
is concerned, even if, it is assumed that the alleged wrongful gain
resulted in loss to the Government Exchequer, the liability, if any,
would be on M/s Broadson Commodities Pvt. Ltd. and its
Directors, not on the petitioner, who was neither Director of the
company nor in any way associated with the affairs of the
company and its business transactions. There exists no material on
record to demonstrate that petitioner was in any way beneficiary of
the alleged transaction.
46. So far as allegation that this petitioner invested
crime proceeds of ₹2.5 crores in Ganinath Ventures LLP is
concerned, the same is based simply on the ground that 142
counterfoils were recovered from the almirah of Hotel Regal,
owned by the father of the petitioner. During investigation, none of
the 142 partners were either summoned or noticed and without
hearing them or making any effort to ascertain the identity and
contributions made by those members/partners, it has been
concluded that Ganinath Ventures LLP was established by the
petitioner with the money of the crime proceeds. Entire allegation
is based on conjectures and surmises and there is no reasonable
ground to come to this conclusion that the money, which was
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invested by the petitioner in the alleged ventures, was of the crime
proceeds.
47. There is no documentary evidence establishing any
direct or indirect nexus between the petitioner and his father in the
mining business. The prosecution’s claim regarding the existence
of such a “syndicate” is based solely on the statements of co-
accused persons recorded under Section 50 of the PMLA, which
remain uncorroborated by any independent material evidence.
Mere inference, based solely on the uncorroborated statements of
co-accused, is insufficient to establish culpability. In the present
case, there exists no material to suggests any nexus between the
petitioner and his father and the generation of proceeds of crime,
nor is there any evidence indicating his involvement in the
acquisition, concealment, layering, or laundering of such proceeds.
On the contrary, the funds invested by the petitioner in his
properties had already been voluntarily disclosed to the Income
Tax Department through a detailed reply dated 24.05.2023. The
Income Tax authorities duly acknowledged and accepted these
funds as income derived from legitimate business activities of the
petitioner and his family members. This acknowledgment was
made even before the petitioner’s name first appeared in the final
prosecution complaint under the PMLA. All the documents, which
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were found at the rented premises of the co-accused, who was also
conducting business operations of Balajee Wire goes to show that
official correspondences addressed to Balajee Wire, including
communications from the Sales Tax and GST Departments, were
regularly directed to that premises and Ashok Kumar was in actual
occupancy of the said premises. Therefore, the petitioner was no
way linked with these documents in any way. This petitioner
voluntarily disclosed an additional income of ₹18 crores to the
Income Tax Department well before the filing of the Enforcement
Directorate’s prosecution complaint, which were earned though the
business of hotel resort and rice mill business of petitioner and as
such, it establishes that the disclosure was made independently and
not as a consequence of any proceedings under the PMLA.
Therefore, any suggestion that the disclosure was prompted by the
allegations under PMLA stands wholly unfounded.
48. Thus, in this case, no money trial or financial records
demonstrate that the petitioner received or laundered alleged
proceeds of crime. On the basis of aforesaid documents, it is not
established that this petitioner facilitated the process of money
laundering by purchasing properties, carrying out renovation and
construction work in the family owned trust property.
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49. From perusal of the materials on record and looking
into the facts of the case and after considering the argument made
at bar and law, as laid down by the Supreme Court in several
decisions, this Court is of the view that at this stage, there is no
reasonable ground to believe that petitioner was actually involved
in the process of concealing, layering and laundering of crime
proceeds.
50. There are a series of decisions of this Court starting
from the decision in the case of K.A. Najeeb i.e. Union of India v.
K.A. Najeeb, reported in (2021) 3 SCC 713, which hold that such
stringent provisions for the grant of ball do not take away the
power of Constitutional Courts to grant bail on the grounds of
violation of Part III of the Constitution of India. In paragraph 17 of
the said decision, it has been laid down that the rigours of such
provisions will melt down where there is no likelihood of trial
being completed in a reasonable time and the period of
incarceration already undergone has exceeded a substantial part of
the prescribed sentence.
51. In Vijay Madanlal Choudhary‘s (supra), the
Supreme Court categorically held that while Section 45 PMLA
restricts the right of the accused to grant of ball, it could not be
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said that the conditions provided under Section 45 impose absolute
restraint on the grant of bail. Para 302 is extracted hereinbelow:-
“302. It is important to note that the twin
conditions provided under Section 45 of the 2002
Act, though restrict the right of the accused to grant
of bail, but it cannot be said that the conditions
provided under Section 45 impose absolute restraint
on the grant of bail. The discretion vests in the court,
which is not arbitrary or irrational but judicial,
guided by the principles of law as provided under
Section 45 of the 2002 Act.”
52. These observations are significant and if read in the
context of the recent pronouncement of this Court dated
09-08-2024 in the case of Manish Sisodia v. Enforcement
Directorate, reported in 2024 SCC OnLine SC 1920, it will be
amply clear that even under PMLA, the governing principle is that
“Bail is the Rule and Jail is the Exception”. In paragraph 52 of
Manish Sisodia‘s case (supra), the Supreme Court has observed
following:-
“52. ….. From our experience, we can say
that it appears that the trial courts and the High
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bail. The principle that bail is a rule and refusal is
an exception is, at times. followed in breach. On
account of non-grant of bail even in
straightforward open-and-shut cases, this Court is
flooded with huge number of bail petitions thereby
adding to the huge pendency. It is high time that the
trial courts and the High Courts should recognise
the principles that “bail is rule and jail is
exception.”
53. In this case, the petitioner is in custody for about 15
months for the offence punishable under Section 4 of the
Prevention of Money Laundering Act, 2002. Charge-sheet has
already been submitted. Till date, charge has not been framed.
Other co-accused persons have already been released on bail. In
this case, prosecution has cited 56 witnesses and document of
more than 4000 pages and as such, trial of this case is not likely to
be concluded in near future.
54. So far as possibility of tampering of evidence is
concerned, it is to be noted that the present case depends upon
documentary evidence, which has already been seized by the
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prosecution and as such, there is no possibility of tampering with
the evidence. Insofar as investigation with regard to petitioner is
concerned, it is completed and therefore, by imposing some
stringent condition, the petitioner can be bailed out.
55. Here, it is also relevant to mention that in this case,
sufficient time was given to the learned counsel for opposite
party/E.D. to file counter affidavit and as such, opposite party/E.D.
was granted sufficient time to oppose the bail petition both by way
of filing counter affidavit and by way of making oral submission.
In this scenario, this Court holds that the petitioner has satisfied
the twin conditions under Section 45 of the PMLA and the Court is
further satisfied that the petitioner is not likely to commit any
offence if he is enlarged on bail.
56. Therefore, considering the aforesaid facts and
circumstances, this bail petition is allowed and the petitioner
namely Kanhaiya Prasad is directed to be released on bail on
furnishing bait bond of Rs. 10,00,000/- (Rupees Ten Lakhs) with
two sureties of the like amount each to the satisfaction of learned
Special Judge, PMLA-cum-District & Sessions Judge, Patna in
connection with Special Trial (PMLA) Case No. 8 of 2023, arising
out of ECIR No. PTZO/14/2023, subject to the following
conditions:-
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i) The petitioner shall regularly and punctually
remain present before the Special Court (PMLA) and
shall cooperate with the Court for early disposal of the
case.
ii) The petitioner shall not leave the country
during the bail period and surrender his passport at the
time of release before the Trial Court.
iii) The petitioner shall provide his mobile
number to the ED authority concerned at the time of
release, which shall be kept in working condition at all
times and he shall not switch off or change the same
without prior intimation to the ED authority
concerned, during the period of bail.
iv) In case, petitioner changes his address, he
will inform the ED as well as to the concerned Court.
v) The petitioner shall not indulge in any
criminal activity during the bail period.
vi) The petitioner shall not directly or
indirectly attempt to contact or communicate with the
prosecution witnesses. If it is found that the petitioner
directly or indirectly made even an attempt to contact
Patna High Court CR. MISC. No.17738 of 2024 dt.22-08-2025
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the bail granted to the petitioner.
vii) If the petitioner seeks adjournments on
non-existing or frivolous grounds or creates hurdles in
the early disposal of the case, the bail granted to him
shall be liable to be cancelled.
57. Accordingly, the present bail application is, hereby,
allowed with the aforesaid conditions.
(Prabhat Kumar Singh, J)
Anay
AFR/NAFR NAFR
CAV DATE 06-08-2025
Uploading Date 22-08-2025
Transmission Date 22-08-2025