Rajesh Kumar vs Directorate Of Enforcement on 28 January, 2025

January 30, 2025

343

Delhi High Court

Rajesh Kumar vs Directorate Of Enforcement on 28 January, 2025

1. The instant bail application has been filed on behalf of the
applicant/petitioner under Section 483 of the Bharatiya Nagarik Suraksha
Sanhita, 2023 (hereinafter “BNSS”) and/or Section 439 of the Code of
Criminal Procedure, 1973 (hereinafter “CrPC“) read with Section 45 of the
Prevention of Money Laundering Act, 2002 (hereinafter “PMLA”) seeking
grant of regular bail in ECIR/DLZO-II/03/2024 dated 22nd April, 2024
registered under Sections 3 and 4 of the PMLA, arising out of FIR No.
59/2024 dated 12th March, 2024, registered at Police Station – Crime Branch,
Delhi for offences punishable under Sections 274, 275, 276, 420, 468, 471
read with 120B and 34 of the Indian Penal Code, 1860 (hereinafter “IPC“).

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 1 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

2. The brief facts that led to the filing of the instant application are that
on 12th March, 2024, FIR No. 59/2024 was registered at Police Station –
Crime Branch, Delhi under Sections 274, 275, 276, 420, 468, 471 read with
120B and 34 of the IPC, based on a complaint by SI Gulab Singh. The
complaint alleged the involvement of several accused persons in the
procurement, manufacturing and sale of spurious anti-cancer medicines.

3. In the said FIR, it has been alleged that the primary accused, namely
Viphil Jain and Suraj Shat, in collusion with their several associates, were
engaged in the illegal procurement of empty vials and raw materials of anti-
cancer drugs such as Keytruda and Opdyta. These counterfeit drugs were
allegedly manufactured and distributed in the market to unsuspecting cancer
patients.

4. Pursuant to the information received, the police formed six teams to
conduct simultaneous raids across Delhi-NCR on 11th March, 2024. During
the raid at Flat No. 1101, Block-2, Eleventh Floor, CSP Units, DLF Capital
Greens, Moti Nagar, New Delhi, the accused persons were allegedly caught
in the act of filling empty vials with unauthorized substances and packaging
them using specialized machinery. The police seized a substantial quantity
of raw materials, counterfeit vials, packaging equipment etc.

5. Based on the FIR, the Directorate of Enforcement (hereinafter “ED”)
initiated ECIR/DLZO-II/03/2024 on 16th March, 2024 under Sections 3 and
4 of the PMLA. On 8th May, 2024, the Police filed chargesheet before the
learned Trial Court in the predicate offence under Sections 274, 275, 276,
308, 406, 420, 34 and 120B of the IPC. The applicant was not named in the

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 2 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
said chargesheet.

6. After the registration of the ECIR, the applicant was summoned by the
investigating agency under Section 50 of the PMLA on multiple occasions.
The first summons were issued on 21st May, 2024 (Annexure-P3), directing
the applicant to appear on 27th May, 2024, however, the applicant failed to
comply with the summons, citing his father’s ongoing medical treatment, and
sought additional time to appear after 6th June, 2024 vide his email dated 2nd
June, 2024.

7. On 6th June, 2024, the respondent filed the first prosecution complaint
under Section 44/45 of the PMLA. Subsequently, second summons were
issued on 12th June, 2024, asking the applicant to remain present before the
ED on 24th June, 2024. Following the repeated non-appearance, the
investigating agency issued fresh summons on 2nd July, 2024, directing the
applicant to appear on 9th July, 2024, to which he finally complied and
appeared before the ED. Upon his appearance on the said date, the
respondent proceeded to arrest the applicant after providing the applicant
with memo of arrest and grounds of arrest. It has been alleged that the
applicant has been known to the co-accused Akshay Kumar since 2012-
2013. In the year 2022, both the applicant and Akshay Kumar planned to
establish a business dealing with medicines. The applicant offered to arrange
the necessary funds, following which they opened M/s Delhi Medicine Hub
at Sector-11, Booth No. 39, Chandigarh for retail selling of cancer related
medicines.

8. On 20th July, 2024, the respondent filed the first supplementary

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 3 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
prosecution complaint implicating a total of 16 accused persons including
the applicant. Subsequently, the learned Special Judge, vide its order dated
21st September, 2024, took cognizance of both, the prosecution complaint as
well as the first supplementary prosecution complaint.

9. The applicant then filed a bail application seeking grant of regular
bail, however, vide order dated 4th October, 2024, the said bail application
was dismissed by the learned Court below. Hence, the present bail
application.

10. Learned counsel appearing on behalf of the applicant submitted that
the arrest of the applicant was unwarranted and conducted in violation of
Section 19 of the PMLA, which requires „reasons to believe‟ before an
arrest.

11. It is submitted that there was no material evidence to justify his arrest
and that the grounds of arrest were merely a mechanical reproduction of
statutory language without specific allegations. It is also submitted that he
had cooperated with the investigation by responding to all summons and
providing the necessary documents, and thus, there was no necessity for his
custodial interrogation.

12. It is submitted that there is no direct evidence linking the applicant to
the alleged „proceeds of crime‟. It is submitted that the applicant is a mere
investor in M/s Delhi Medical Hub and was not involved in its day-to-day
operations. It is submitted that the respondent relies primarily on the
statement of co-accused Akshay Kumar recorded under Section 50 of the
PMLA, which the applicant argues, is inadmissible in law and cannot be

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 4 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
used as the sole basis for his arrest or continued detention.

13. It is submitted that the alleged amount involved in the money
laundering case does not exceed Rs. 1 crore, which according to the proviso
to Section 45(1) of the PMLA, exempts him from the twin conditions for
bail.

14. It is submitted that neither the Prosecution Complaint nor the
applicant’s statement recorded under Section 50 of the PMLA alleges that
the applicant had any awareness or knowledge that the subject medicines
were not genuine. It is submitted that in the absence of any specific assertion
or material to establish the applicant‟s conscious knowledge regarding the
spurious nature of the medicines, it cannot be inferred that the applicant had
knowingly participated in the process of money laundering.

15. It is submitted that the applicant was neither named in the initial FIR
nor in the chargesheet filed by the Delhi Police in the predicate offence. It is
submitted that the name of the applicant only surfaced due to the statement
of a co-accused recorded under Section 50 of the PMLA, and there is no
documentary or circumstantial evidence proving his involvement in the
criminal activity.

16. It is submitted that the investigation is complete, prosecution
complaints have been filed, and further incarceration serves no purpose.

17. It is submitted that the trial is likely to be prolonged due to the
voluminous nature of the record and the involvement of multiple accused
persons, making prolonged detention unjustified.

18. Therefore, in view of the foregoing submissions, it is prayed that the

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 5 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
instant application may be allowed, and the applicant be released on bail.

19. Per Contra, learned counsel appearing on behalf of the respondent ED
vehemently opposed the instant application submitting to the effect that the
same is liable to be dismissed being devoid of any merit.

20. It is submitted that the offence of money laundering as alleged against
the applicant, is of a serious nature and has far-reaching consequences,
particularly given the involvement in sale of spurious anti-cancer medicines.
It is also submitted that the alleged offence not only involves financial fraud
but also endangers public health and safety, thus justifying stringent legal
action.

21. It is submitted that the applicant was not merely an investor in M/s
Delhi Medical Hub but was actively involved in the financial management
of the firm. It is submitted that the applicant knowingly facilitated
transactions involving the proceeds of crime generated through the illegal
trade of counterfeit medicines.

22. It is submitted that there is sufficient material evidence, including
financial records, electronic data and statements of co-accused persons, to
establish the applicant‟s role in the laundering of illicit proceeds. It is
submitted that the financial trail indicates the applicant‟s complicity in
concealing and projecting „proceeds of crime‟ as legitimate.

23. It is submitted that the applicant‟s conduct, such as transactions made
via hawala channels and in third-party accounts indicates his direct
involvement in the generation and layering of proceeds of crime, thereby
falling squarely within the ambit of Section 3 of the PMLA.

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 6 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

24. It is submitted that the applicant has not satisfied the twin conditions
under Section 45 of the PMLA, which requires demonstrating/proving that
he is not guilty of the offence and that he is unlikely to commit any offence
while on bail.

25. It is also submitted that the investigation is still ongoing, and further
evidence is being uncovered to establish deeper links within the financial
network. Given the applicant‟s influential position and access to resources,
there exists a substantial risk of influencing witnesses and tampering of
evidence.

26. It is submitted that the learned Special Judge has already rejected the
applicant‟s bail plea, citing the gravity of the offence and the involvement of
substantial proceeds of crime. It is submitted that the applicant poses a flight
risk, given the serious nature of allegations and the potential for a severe
sentence upon conviction.

27. It is submitted that the PMLA attributes liability not just to individuals
but to all conspirators involved in an offence and since the proceeds of crime
generated from the offence in the instant case benefit all the accused directly
or indirectly, the applicant herein cannot claim immunity based on the
quantum of money involved in the specific transactions pertaining to him.
Therefore, the applicant, by his active participation, is liable for the entire
proceeds of crime, and thus, the instant bail application is liable to be
rejected.

28. It is also submitted that the applicant herein cannot seek exemption
from the rigors of Section 45 of the PMLA by stating that the proceeds of

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 7 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
crime attributed to him is less than Rs. 1 Crore. It is further submitted that
the entire crime and entire transactions which have been funneled among all
the accused persons have to be taken into consideration for the constitution
of an offence under Section 45 of the PMLA.

29. Therefore, in view of the foregoing submissions, it is prayed that the
instant application may be dismissed.

30. Heard the counsel for the parties at length and perused the material
available on record.

31. In light of the submissions made before this Court, it is made out that
the grounds contended by the applicant for grant of bail are multifold.
Firstly, it has been contended that the applicant‟s arrest was not conducted in
compliance with the provisions of Section 19 of the PMLA which requires
„reasons to believe‟ before making an arrest. Secondly, the statements made
by co-accused Akshay Kumar under Section 50 of the PMLA form the sole
basis for the applicant‟s arrest which are not sufficient to justify his arrest.
Lastly, the applicant is exempted from the twin conditions of bail under
Section 45 of the PMLA. However, even if it is assumed for the sake of
arguments that he is not exempted under the proviso, the applicant satisfies
the twin conditions prescribed under the aforesaid provision.

32. Learned counsel for the applicant has contended that the applicant‟s
arrest was not conducted in compliance with the provisions of Section 19 of
the PMLA which requires „reasons to believe‟ before making an arrest. It
has been further argued that the statements made by co-accused Akshay

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 8 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Kumar under Section 50 of the PMLA form the sole basis for the applicant‟s
arrest which are not sufficient to justify the applicant‟s arrest.

33. The question before this court is whether the applicant‟s arrest was
carried out in adherence to the statutory requirements under Section 19 of
the PMLA which mandates that the authorized officer must have „reason to
believe‟ based on material evidence before arresting an individual accused
of money laundering. The said provision reads as under:

“Section 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 [Special Court or] Judicial
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
[Special Court or] Magistrate’s Court.”

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 9 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

50. The following ingredients can be culled out from the reading of
Section 19(1) of PMLA: firstly, the officer concerned must have some
“material in his possession”. Secondly, on the basis of such material, the
officer should have a „reason to believe‟ that any person has been „guilty‟ of
an offence punishable under PMLA. Thirdly, such reasons should be
recorded in „writing‟ by the officer concerned and lastly, the person so
arrested should be „informed of the grounds of arrest‟.

34. The compliance of these conditions is undoubtedly mandatory, which
is also fortified by the explanation added to Section 45 of the PMLA, which
provides as under:

“Section 45. Offences to be cognizable and non-bailable.

***
Explanation. For the removal of doubts, it is clarified that the
expression “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 (2 of 1974),
and accordingly the officers authorised under this Act are
empowered to arrest an accused without warrant, subject to the
fulfillment of conditions under section 19 and subject to the
conditions enshrined under this section.”

35. Having examined the statutory framework governing the power of
arrest under Section 19 of the PMLA, this Court shall now proceed to
consider the judicial precedents that have interpreted and applied these
provisions in various factual contexts.

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 10 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

36. In Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1,
the Hon‟ble Supreme Court had made the following observations:

“208. Section 19 of the 2002 Act postulates the manner in
which arrest of person involved in money laundering can be
effected. Sub-section (1) of Section 19 envisages that the
Director, Deputy Director, Assistant Director, or any other
officer authorised in this behalf by the Central Government, if
has material in his possession giving rise to reason to believe
that any person has been guilty of an offence punishable under
the 2002 Act, he may arrest such person. Besides the power
being invested in high-ranking officials, Section 19 provides for
inbuilt safeguards to be adhered to by the authorised officers,
such as of recording reasons for the belief regarding the
involvement of person in the offence of money laundering. That
has to be recorded in writing and while effecting arrest of the
person, the grounds for such arrest are informed to that person.
Further, the authorised officer has to forward a copy of the
order, along with the material in his possession, in a sealed
cover to the adjudicating authority, who in turn is obliged to
preserve the same for the prescribed period as per the Rules.”

37. Further in the case of V. Senthil Balaji v. State, (2024) 3 SCC 51, the
Hon‟ble Supreme Court has explained the mandate of Section 19 of the
PMLA by observing the following:

“40. To effect an arrest, an officer authorised has to assess and
evaluate the materials in his possession. Through such
materials, he is expected to form a reason to believe that a
person has been guilty of an offence punishable under the
PMLA, 2002. Thereafter, he is at liberty to arrest, while
performing his mandatory duty of recording the reasons. The
said exercise has to be followed by way of an information being
served on the arrestee of the grounds of arrest. Any non-
compliance of the mandate of Section 19(1) of the PMLA, 2002

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 11 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
would vitiate the very arrest itself. Under sub-section (2), the
authorised officer shall immediately, after the arrest, forward a
copy of the order as mandated under sub-section (1) together
with the materials in his custody, forming the basis of his belief,
to the adjudicating authority, in a sealed envelope. Needless to
state, compliance of sub-section (2) is also a solemn function of
the arresting authority which brooks no exception.”

38. In case of Pankaj Bansal v. Union of India, (2024) 7 SCC 576, the
Hon‟ble Supreme Court while reiterating the principles laid down in case of
Vijay Madanlal Choudhary (Supra) has made the following observations
on the scope of Section 19 of the PMLA:

“17. At this stage, it would be apposite to consider the case law
that does have relevance to these appeals and the issues under
consideration. In Vijay Madanlal Choudhary [Vijay Madanlal
Choudhary v. Union of India, (2023) 12 SCC 1 : 2022 SCC
OnLine SC 929 : (2022) 10 Scale 577] , a three-Judge Bench of
this Court observed that Section 65 PMLA predicates that the
provisions of the Code of Criminal Procedure, 1973, shall
apply insofar as they are not inconsistent with the provisions of
PMLA in respect of arrest, search and seizure, attachment,
confiscation, investigation, prosecution and all other
proceedings thereunder. It was noted that Section 19 PMLA
prescribes the manner in which the arrest of a person involved
in money laundering can be effected. It was observed that such
power was vested in high-ranking officials and that apart,
Section 19 PMLA provided inbuilt safeguards to be adhered to
by the authorised officers, such as, of recording reasons for the
belief regarding involvement of the person in the offence of
money laundering and, further, such reasons have to be
recorded in writing and while effecting arrest, the grounds of
arrest are to be informed to that person.”

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 12 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

39. The inference drawn from the above judicial pronouncements is that
Section 19 of the PMLA imposes procedural safeguards on the arresting
authority, thereby, ensuring that arrests are not made arbitrarily but are based
on well-founded reasons which are also recorded in writing. The decisions
quoted in the foregoing paragraphs reaffirm that compliance with these
procedural requirements is mandatory, and any deviation from the
prescribed framework could vitiate the arrest. The courts have consistently
emphasized that the power to arrest under the PMLA is vested in high-
ranking officials and must be exercised with due diligence, ensuring that the
accused is informed of the grounds of arrest and that the requisite material is
submitted to the adjudicating authority in a sealed manner.

40. In the present case, it has been argued on behalf of the applicant that
his arrest was conducted in a mechanical manner without recording specific
reasons for belief of guilt. The grounds of arrest, as communicated, were
allegedly a verbatim reproduction of statutory language without reference to
specific material evidence.

41. Conversely, the respondent argues that the arrest was made after due
consideration of financial records and electronic evidence establishing the
applicant‟s role in laundering proceeds of crime. It has been submitted that
all statutory requirements were met and that the arrest was necessary to
prevent the tampering and destruction of evidence and influence over
witnesses.

42. In assessing the legality of the applicant‟s arrest, this Court must
carefully examine the contents of the grounds of arrest provided to the

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 13 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
applicant at the time of his arrest which has been placed on record as
Annexure P-8 to the present bail application. This Court shall now proceed
to analyze the relevant portions of the grounds of arrest of the applicant
herein. The extracts are reproduced herein below for reference:

“..GROUNDS OF ARREST OF RAJESH KUMAR S/O SHRI
HANS RAJ IN ECIR NO ECIR/DLZO-11/03/2024 DATED
16.03.2024
That FIR No. 59/2024, dated 12.03.2024, was registered in
Crime Branch, Delhi Police, New Delhi for offences under
sections 274/275/276/420/ 468/471/12013 and 34 of Indian
Penal Code, 1860, against Sh. Viphil Jain S/o Late Sh. Pawan
Kumar Jain r/o H. No. T 21, Gali No. 8, Gautumpupri, New
Seelampur, Bhajanpura, North East, Delhi and Sh. Suraj Shat
S/o Sh. Kartik Shat r/o G 315/5, Gali No. 15, West Karawal
Nagar, North East, Delhi.

***
***
During the investigations, it is revealed that you, Rajesh
Kumar, is a partner in M/s Delhi Medicine Hub along with
Akshay Kumar. Akshay Kumar, during his statement recorded
under section 50 of the PMLA on 05.04.2024, admitted that he
came in contact with Tushar Chauhan through India Mart
Online Application for purchase of Cancer Medicine. ***
Further Akshay Kumar admitted that you both took all financial
and business decision mutually and you both have control over
business of anti-cancer medicines in Ws Delhi Medicine Hub.
That whatsapp chats between Neeraj Chauhan and you, Rajesh
Kumar, revealed that you, Rajesh Kumar demanded sealed and
unsealed Keytruda injection from Neeraj Chauhan. You, Rajesh
Kumar through his firm i.e. Ws Delhi Medicine Hub further
sold these anti-cancer medicines in open market including
Hospital/s. Further, it is to mention that money for the purchase
of such spurious anti-cancer medicines was transferred from

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 14 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
the bank accounts of M/s Delhi Medicine Hub to the accounts
of family members of Viphil Jain, Suraj Shat, Tushar Chauhan
and others.

***
***
That further, it is revealed that you, Rajesh Kumar and Akshay
Kumar had sold anti-cancer medicines procured from Neeraj
Chauhan and others in open market and payments were
received in the bank account of M/s Delhi Medicine.
***
***
That, you, Rajesh Kumar was associated in running a fake anti-
cancer medicine syndicate and involved to sell the said fake
anti- cancer medicine with your other associates in open
market and thereby you involved yourself in generation of
Proceeds of Crime. Further, you have transferred such
proceeds of crime in the accounts of your associates and their
family members. Therefore, I have reasons to believe that you,
Rajesh Kumar is guilty of having committed the offence of
money laundering under Section 3 of PMLA, 2002 punishable
under section 4 of the said Act.

***
***
Therefore, analysis of the material gathered clearly points out
that you, Rajesh Kumar is involved in acquisition and
utilization of proceeds of crime generated out of the criminal
activity. Therefore you have committed the offence of money
laundering under Section 3 of PMLA, 2002 punishable under
Section 4 of the said act. *** Hence your custodial
interrogation is required. Therefore, you are arrested as per
provisions of section 19 of PMLA, 2002…”

43. After thorough examination of the grounds of arrest, it becomes
evident that the investigating agency has outlined specific details

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 15 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
highlighting the applicant‟s involvement in the alleged offence. It is
observed that the applicant was duly informed about his firm‟s involvement
and that the applicant was a partner is M/s Delhi Medicine Hub along with
co-accused Akshay Kumar and both mutually took financial and business
decisions regarding the procurement and sale of spurious anti-cancer
medicines, which is clearly evident from the grounds of arrest.

44. Further, the applicant, through his firm, M/s Delhi Medicine Hub,
facilitated the sale of counterfeit medicines in the open market, including
hospitals, thereby actively participating in the distribution of fake medicines.

45. It is also evident from the bare reading of the grounds of arrest that the
generated proceeds of crime were allegedly transferred to the accounts of the
associates and their family members. This shows the role of the applicant in
the laundering and distribution of the illicit gains.

46. The investigating authority has also relied on statements recorded
under Section 50 of the PMLA, which reveal that the applicant was directly
involved in sourcing counterfeit medicines without invoices, demanding
sealed and unsealed Keytruda injections, and receiving payments through
both formal banking channels and illegal hawala transactions. The relevant
portion of various statements recorded under Section 50 of the PMLA is as
under:

“..Statement of Shri Akshay Kumar S/o Shri 1\ilaman Ram
Sharma Rio 599, Burail, Sector-45, Chandigarh-160047;
having DOB: 30.09.1985: mobile no 6239172836 and
9855003814, Email id: [email protected], Aged-
39 years, recorded before the Assistant Director, Enforcement

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 16 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Directorate u/s 50 of PMLA, 2002 on 23.05.2024,
In response to the summon no. PMLA/Summon/DLZO2
/2024/2496 dated 27.03.2024 and in compliance of order dated
22.05.2024 passed by Hon’ble Special PMLA, Court, Tis
Hazari-West; I, Akshay Kumar S/o Shri Maman Ram Sharma
presently residing at 1094, 2nd Floor, Sector-39B, Chandigarh;
has appeared before Shri Praveen Kumar, Assistant Director,
Directorate of Enforcement, Delhi Zonal Office-II, New Delhi
on 23.05.2024, to tender my statement u/s 50 of PMLA, 2002. I
have been explained the provisions of section 50 of PMLA,
2002 and I understand that I have to give my true and correct
statement. I have been explained that my statement can be used
as evidence against me or any other person in the proceedings
under the PMLA, 2002. I understand that giving false statement
is punishable offence under the law.

I proceed to tender my further statement:

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 17 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 18 of 51

By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 19 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 20 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 21 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 22 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
***..”

47. The financial records cited hereinabove indicate substantial money
transfers from M/s Delhi Medicine Hub to the accounts of known associates
involved in the counterfeit medicine syndicate. These transactions, along
with the applicant‟s control over the business operations, substantiate the
claim that he was engaged in money laundering activities.

48. This Court is satisfied that the investigating authority followed due
process and substantiated the ‘reason to believe’ with concrete evidence
rather than mere suspicion. Accordingly, the challenge to the legality of the
arrest is without merit, and no relief is warranted to the applicant on this
ground.

49. Having examined and determined the first issue regarding the legality
of the applicant‟s arrest under Section 19 of the PMLA, this Court shall now
proceed on to the second interconnected ground raised by the applicant, i.e.,
the statements made by the co-accused Akshay Kumar under Section 50 of
the PMLA form the sole basis for the applicant‟s arrest which is not
sufficient to justify the applicant‟s arrest. The said provision reads as under:

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 23 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

“Section 50. Powers of authorities regarding summons,
production of documents and to give evidence, etc
(1) The Director shall, for the purposes of section 13, have the
same powers as are vested in a civil court under the Code of
Civil Procedure, 1908 (5 of 1908) while trying a suit in respect
of the following matters, namely: –

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any
officer of a [reporting entity] and examining him on oath;

(c) compelling the production of records;

(d) receiving evidence on affidavits;

(e) issuing commissions for examination of witnesses and
documents; and

(f) any other matter which may be prescribed.
(2) The Director, Additional Director, Joint Director, Deputy
Director or Assistant Director shall have power to summon any
person whose attendance he considers necessary whether to
give evidence or to produce any records during the course of
any investigation or proceeding under this Act.
(3) All the persons so summoned shall be bound to attend in
person or through authorised agents, as such officer may
direct, and shall be bound to state the truth upon any subject
respecting which they are examined or make statements, and
produce such documents as may be required.
(4) Every proceeding under sub-sections (2) and (3) shall be
deemed to be a judicial proceeding within the meaning of
section 193 and section 228 of the Indian Penal Code (45 of
1860).

(5) Subject to any rules made in this behalf by the Central
Government, any officer referred to in sub-section (2) may
impound and retain in his custody for such period, as he thinks
fit, any records produced before him in any proceedings under
this Act:

Provided that an Assistant Director or a Deputy Director shall
not-

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 24 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

(a) impound any records without recording his reasons for so
doing; or

(b) retain in his custody any such records for a period
exceeding three months, without obtaining the previous
approval of the [Joint Director].”

50. A careful reading of the provision reveals that the authorities
empowered under Section 50 of the PMLA possess the authority to enforce
discovery and inspection, compel the attendance of individuals, examine
them on oath, require the production of records, receive evidence through
affidavits, and issue commissions for the examination of witnesses and
documents.

51. The provision further clarifies that any person summoned under sub-
section (2) is legally bound to comply, state the truth regarding matters
under inquiry, and produce the requisite documents as directed by the
authorities. It is pertinent to note that such proceedings are deemed to be
judicial proceedings under Sections 193 and 228 of the IPC.

52. Having examined the scope and application of Section 50 of the
PMLA, the core question that now arises for consideration is whether the
statements recorded under this provision are admissible as evidence and to
what extent they can be relied upon to justify the applicant‟s arrest and
continued detention.

53. The Hon‟ble Supreme Court in Rohit Tandon v. Directorate of
Enforcement, (2018) 11 SCC 46 made the following observations regarding
the admissibility of statements recorded under Section 50 of the PMLA:

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 25 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

“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.”

54. In a recent judgment, the Hon‟ble Supreme Court in Abhishek
Banerjee v. Enforcement Directorate, (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

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 26 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
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 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.”

55. In light of the foregoing judicial pronouncements, it is evident that
statements recorded under Section 50 of the PMLA 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 PMLA.

56. In the aforesaid judgment, the Hon‟ble Supreme Court also reaffirmed
the admissibility of Section 50 of the PMLA distinguishing them from
statements recorded under the CrPC. 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 PMLA and, therefore, admissible as evidence in
proceedings under the PMLA. The Hon‟ble Court further clarified that the
provisions of Section 50 of the PMLA having an overriding effect by virtue
of Sections 65 and 71 of the PMLA prevail over the procedural safeguards
under the CrPC.

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 27 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

57. Accordingly, this Court is of the considered view that statements
recorded under Section 50 of the PMLA are admissible in evidence and can
be relied upon to establish culpability in money laundering cases.

58. Having examined the admissibility of statements recorded under
Section 50 of the PMLA, this Court shall now proceed to analyze the
statutory framework governing the burden of proof 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.”

59. From the bare perusal of Section 24 of the PMLA, it is evident that
once a person is charged with the offence of money laundering under
Section 3 of the PMLA, the law presumes that the proceeds of crime are
involved in money laundering unless the contrary is proven by the accused.

60. In the present case, the investigating agency has relied not only on the
statement of co-accused under Section 50 of the PMLA but also on financial
records, WhatsApp communications, and transactional data, which indicate
the applicant’s active role in the alleged money laundering activities.

61. By virtue of Section 24 of the PMLA, the respondent is not required
to conclusively establish the applicant’s guilt at the pre-trial stage, rather, the

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 28 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
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 PMLA stands in favor of
the respondent, thereby, justifying his continued detention.

62. With regard to the above, this Court has referred to the judgment of
the Hon‟ble Supreme Court in Prem Prakash v. Enforcement Directorate,
(2024) 9 SCC 787, wherein, the following observations were made:

“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 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

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 29 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
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.

***

239. Be it noted that the legal presumption under Section 24(a)
of the 2002 Act, 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
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. 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 [Sarbananda Sonowal v. Union of India,
(2005) 5 SCC 665] .

240. 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. In any

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 30 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
case, in terms of Section 114 of the Evidence Act, it is open to
the court to presume the existence of any fact which it thinks
likely to have happened, regard being had to the common
course of natural events, human conduct, and public and
private business, in their relation to the facts of the particular
case. Considering the above, the provision under consideration
[Section 24(a)] by no standards can be said to be unreasonable
much less manifestly arbitrary and unconstitutional.”

63. In light of the principles enunciated by the Hon‟ble Supreme Court in
Vijay Madanlal Choudhary (Supra) and reiterated in Prem Prakash
(Supra), this Court must determine whether the foundational facts necessary
to invoke the presumption under Section 24 of the PMLA have been
established by the respondent. The Hon‟ble Supreme Court has categorically
held that the prosecution must satisfy three essential ingredients. First, the
commission of a scheduled offence must be established. Second, the
property in question must be shown to have been derived or obtained,
directly or indirectly, as a result of such criminal activity and third, the
accused must be linked, directly or indirectly, to any process or activity
connected with the proceeds of crime.

64. The materials placed on record indicate that the applicant, as a partner
in M/s Delhi Medicine Hub, actively participated in the procurement and
sale of spurious anti-cancer medicines. The investigation has revealed that
the applicant’s firm engaged in financial transactions involving the proceeds
of crime, including payments made through banking channels and hawala
transactions.

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 31 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

65. The financial records submitted by the respondent further substantiate
the extent of profits accrued by M/s Delhi Medicine Hub in its account
maintained in ICICI Bank through the sale of spurious anti-cancer
medicines. The data presented in Table-13, extracted from the prosecution
complaint, provides a detailed breakdown of the number of vials sold, the
profit earned per vial, and the total profit generated by the firm.

66. The allegations against the applicant herein specifically highlight the
flow of funds from the applicant’s firm to the accounts linked with known
associates involved in the counterfeit medicine syndicate, thereby
establishing the existence of proceeds of crime and the applicant’s
involvement in the process of money laundering.

67. Applying the legal presumption under Section 24(a) of the PMLA,
once the respondent has demonstrated these foundational facts, the onus

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 32 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
shifts to the applicant to rebut the presumption that the proceeds of crime
were not involved in money laundering. The applicant, however, has failed
to provide any credible evidence to rebut this presumption. Mere denial of
involvement or assertion of being an investor in the firm without day-to-day
operational control is insufficient to discharge the burden imposed by the
statute.

68. Furthermore, as clarified by the Hon‟ble Supreme Court in various
judgments, the presumption under Section 24(a) of the PMLA does not
operate conclusively and allows the accused an opportunity to rebut the
same through cross-examination, production of evidence, or explanations
under Section 313 of the CrPC. In the absence of any such rebuttal, the
presumption stands in favor of the respondent, and the applicant’s continued
detention is justified under the PMLA.

69. Therefore, it is observed by this Court that the respondent had
sufficient material in its possession, including financial records, digital
evidence, and the applicant‟s communications, to establish a valid ‘reason to
believe’ that the applicant was guilty of the offence of money laundering.
The procedural safeguards under the Act were duly followed, and the
challenge to the legality of the arrest is without any merit.

70. Furthermore, the contention that the applicant‟s arrest was solely
based on the statement of co-accused Akshay Kumar under Section 50 of the
PMLA is unfounded.

71. It is observed by this Court that the respondent has presented
corroborative material, including financial transactions and records, linking

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 33 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
the applicant to the proceeds of crime. Considering the presumption under
Section 24 of the PMLA, the burden shifted to the applicant to disprove his
involvement in the alleged offence. However, the applicant has failed to
provide any credible evidence to rebut the statutory presumption.

72. In view of the foregoing analysis, this Court finds that the applicant‟s
arrest was conducted in compliance with the statutory mandate of Section 19
of the PMLA.

73. Moving further, it has been argued on behalf of the applicant that the
applicant is exempted from the twin conditions of bail under Section 45 of
the PMLA. However, even if it is assumed for the sake of arguments that he
is not exempted under the proviso, the applicant satisfies the twin conditions
prescribed under the aforesaid provision.

74. In order to adjudicate the instant issue, this Court shall first peruse the
text of Section 45 of the PMLA, which lays down the statutory mandate
regarding the grant of bail in such cases and establishes the twin conditions
that the applicant must fulfill to secure release on bail.

“Section 45. Offences to be cognizable and non-bailable.

(1) [Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person accused of an
offence 2[under this Act] shall be released on bail or on his
own bond unless–]

(i) the Public Prosecutor has been given a 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:

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 34 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

Provided that a person, who, is under the age of sixteen years,
or is a woman or is sick or infirm, 3[or is accused either on his
own or along with other co-accused of money-laundering a sum
of less than one crore rupees] may be released on bail, if the
Special Court so directs:

Provided further that the Special Court shall not take
cognizance of any offence punishable under section 4 except
upon a complaint in writing made by–

(i) the Director; or

(ii) any officer of the Central Government or a State
Government authorised in writing in this behalf by the Central
Government by a general or special order made in this behalf
by that Government.

[(1A) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), or any other provision
of this Act, no police officer shall investigate into an offence
under this Act unless specifically authorised, by the Central
Government by a general or special order, and, subject to such
conditions as may be prescribed.]
(2) The limitation on granting of bail specified in sub-section
(1) is in addition to the limitations under the Code of Criminal
Procedure, 1973 (2 of 1974) or any other law for the time being
in force on granting of bail.

[Explanation.–For the removal of doubts, it is clarified that the
expression “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 (2 of 1974),
and accordingly the officers authorised under this Act are
empowered to arrest an accused without warrant, subject to the
fulfillment of conditions under section 19 and subject to the
conditions enshrined under this section.]”

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 35 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

75. This Court shall now proceed to analyze the statutory framework
under Section 45 of the PMLA which governs the grant of bail in cases of
money laundering. Section 45 imposes stringent conditions on the grant of
bail. A careful reading of the provision reveals the following essential
ingredients that must be satisfied before bail is granted.

76. Firstly, Section 45(1) of the PMLA mandates that no person accused
of an offence under the PMLA shall be released on bail or on his own bond
unless two cumulative conditions are satisfied:(i) the Public Prosecutor must
be given an opportunity to oppose the bail application; and (ii) if the Public
Prosecutor opposes the application, the Court must be satisfied that there are
reasonable grounds for believing that the accused is not guilty of the offence
and is not likely to commit any offence while on bail.

77. Secondly, Section 45(2) of the PMLA provides that the limitations on
the grant of bail under sub-section (1) are in addition to the limitations
imposed under the CrPC, or any other law applicable at the time. This makes
it clear that the provisions of the PMLA are to be applied over and above the
general principles of bail applicable to criminal offences under the CrPC,
thereby reinforcing the stringent approach adopted by the legislature in
dealing with money laundering offences.

78. Thirdly, the proviso to Section 45(1) of the PMLA carves out an
exception to the rigorous twin conditions by allowing bail to be granted, at
the discretion of the Special Court, to specific categories of persons, namely:

(i) individuals below the age of sixteen years, (ii) women, (iii) persons who

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 36 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
are sick or infirm, and (iv) those accused, either alone or with others, of
money laundering involving a sum of less than rupees one Crore.

79. Following a perusal of the statutory provision, it becomes imperative
to examine the judicial pronouncements that have interpreted and applied
Section 45 of the PMLA in various factual contexts.

80. The Hon‟ble Supreme Court in Nikesh Tarachand Shah v. Union of
India, (2018) 11 SCC 1 struck down the twin conditions as unconstitutional.
However, the legislature subsequently amended the provision to cure the
defects, and it has since been upheld in Vijay Madanlal Choudhary
(Supra), reaffirming the strict nature of bail conditions under the PMLA. In
Prem Prakash (Supra), the Hon‟ble Supreme Court has also delved into the
principles pertaining to bail in PMLA matters. The relevant paragraphs are
as under:

“Section 45 PMLA — Contours

10. Considering that the present is a bail application for the
offence under Section 45 PMLA, the twin conditions mentioned
thereof become relevant. Section 45(1) PMLA reads as under:

“45. Offences to be cognizable and non-bailable. — (1)
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), 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:

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 37 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

Provided that a person, who, is under the age of sixteen years,
or is a woman or is sick or infirm or is accused either on his
own or along with other co-accused of money-laundering a sum
of less than one crore rupees, may be released on bail, if the
Special Court so directs:

Provided further that the Special Court shall not take
cognizance of any offence punishable under Section 4 except
upon a complaint in writing made by–

(i) the Director; or

(ii) any officer of the Central Government or a State
Government authorised in writing in this behalf by the Central
Government by a general or special order made in this behalf
by that Government.”

11. In Vijay Madanlal Choudhary v. Union of India [Vijay
Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] , this
Court categorically held that while Section 45 PMLA restricts
the right of the accused to grant of bail, it could not be said that
the conditions provided under Section 45 impose absolute
restraint on the grant of bail. Para 302 is extracted
hereinbelow : (SCC p. 259)
“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.”

These observations are significant and if read in the context of
the recent pronouncement of this Court dated 9-8-2024 in
Manish Sisodia v. Enforcement Directorate [Manish Sisodia v.
Enforcement Directorate, (2024) 12 SCC 660 : 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 para 52 of Manish Sisodia [Manish Sisodia v.

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 38 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

Enforcement Directorate, (2024) 12 SCC 660 : 2024 SCC
OnLine SC 1920] , this Court observed as under:

“52. … From our experience, we can say that it appears that
the trial courts and the High Courts attempt to play safe in
matters of grant of 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
principle that “bail is rule and jail is exception.”

12. All that Section 45 PMLA mentions is that certain
conditions are to be satisfied. The principle that, “bail is the
rule and jail is the exception” is only a paraphrasing of Article
21 of the Constitution of India, which states that no person
shall be deprived of his life or personal liberty except
according to the procedure established by law. Liberty of the
individual is always a Rule and deprivation is the exception.
Deprivation can only be by the procedure established by law,
which has to be a valid and reasonable procedure. Section 45
PMLA by imposing twin conditions does not re-write this
principle to mean that deprivation is the norm and liberty is the
exception. As set out earlier, all that is required is that in cases
where bail is subject to the satisfaction of twin conditions, those
conditions must be satisfied.

***
Scope of inquiry under Section 45 PMLA

16. Coming back to the scope of inquiry under Section 45, Vijay
Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of
India, (2023) 12 SCC 1] , while reiterating and agreeing with
the holding in Ranjitsing Brahmajeetsing Sharma v. State of
Maharashtra [Ranjitsing Brahmajeetsing Sharma v. State of
Maharashtra, (2005) 5 SCC 294 : 2005 SCC (Cri) 1057] , held
that the court while dealing with the application for grant of
bail in PMLA need not delve deep into the merits of the case

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 39 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
and only a view of the court based on the available 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 are “reasonable grounds for believing”

which means that the court has to see only if there is a genuine
case against the accused and the prosecution is not required to
prove the charge beyond reasonable doubt.”

81. Having considered the legislative intent behind Section 45 and the
judicial precedents interpreting its application, this Court shall now proceed
to apply the established principles to the facts of the present case to assess
whether the applicant has successfully discharged the burden of proving that
he is not guilty of the alleged offence and is unlikely to commit any offence
while on bail.

82. The applicant has contended that the alleged offence pertains to an
amount below Rs. 1 Crore, which should exempt him from the rigors of
Section 45 of the PMLA in light of its proviso.

83. The material on record demonstrates that the accused persons
operated in a highly coordinated and systematic manner, with clear
understanding and collaboration among them to facilitate the offence.

84. The evidence shows deliberate concealment of the origin of funds, the
use of entities such as M/s Delhi Medicine Hub, and the layering of
transactions to evade detection by regulatory authorities. The sheer scale of
operations, involving the movement of funds across multiple jurisdictions,
use of hawala channels, and sale of counterfeit medicines to unsuspecting

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 40 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
patients and hospitals, underscores the organized and syndicated nature of
the offence.

85. The respondent has provided a detailed representation of the modus
operandi of the accused persons in the form of a graphic illustration.

86. As emphasized by the Hon‟ble Supreme Court in a catena of
judgments, the offence of money laundering must be viewed in the context
of the entire criminal enterprise rather than in isolation with respect to
individual roles. The collective nature of the operations, the financial
interlinkages between the accused persons, and the fraudulent intent
evidenced through sustained unlawful activity, leave no doubt that the
applicant was an integral part of the broader scheme to launder proceeds of
crime. At this stage, this Court has referred to the judgment of the Hon‟ble

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 41 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Supreme Court passed in the matter of Saumya Chaurasia v. Enforcement
Directorate, (2024) 6 SCC 401, wherein, the Hon‟ble Court extensively
discussed the working of a syndicate and how the proceeds of crime are
attributable to the same along with the discretion granted to the Courts under
the proviso to Section 45 of the PMLA. The relevant paragraphs of the same
are as under:

“..19. As stated hereinabove, the supplementary complaint was
filed against the appellant along with the other accused on 30-
1-2023, in which the summary of investigative findings against
each of the accused persons have been recorded in Para 8
thereof. The details of the investigation conducted by the
respondent ED have been stated in Para 9 and the role of each
accused including the appellant in the commission of alleged
offence of money laundering has been stated in Para 10 thereof,
which reads as under:

“10. Role of accused in the offence of money laundering
A. Evidences of offence of money laundering against Smt
Saumya Chaurasia–

Mrs Saumya Chaurasia is an officer of the Chhattisgarh State
Civil Services who was posted as the Deputy Secretary in the
Office of Chief Minister of Chhattisgarh and was working as an
OSD to CM. Despite being relatively very junior in the
bureaucratic hierarchy, she enjoyed unprecedented power and
control because of her direct access to higher political powers.
Information shared by the Income Tax Department and analysis
of documents and digital devices seized during the searches
conducted under Section 17 PMLA, 2002 revealed that Smt
Saumya Chaurasia, Deputy Secretary working in the Chief
Minister’s Office, is one of the key persons in creation of the
syndicate headed by Shri Suryakant Tiwari. An extortion racket
of this magnitude and nature was possible only when multiple
State agencies fell in place and everyone supported the illegal

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 42 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
acts of Suryakant Tiwari. This was made possible by Saumya
Chaurasia so that pliant officers were posted in the coal mining
districts who would listen to Suryakant Tiwari. Also, it was an
unwritten rule that instructions of Suryakant Tiwari meant the
voice of Saumya Chaurasia and the powers to be. The fact that
Suryakant Tiwari had personal and close official dealings with
her and was carrying her instructions to the officers, made it
possible for Suryakant Tiwari to also command senior district
level officers. This illegal authority was essential for him to run
his empire of illegal extortion from coal & iron pellet
transportation. Without his concurrence, no NOC was issued by
the district machinery. All this was made possible by the fact
that he was in the good books of Mrs Saumya Chaurasia.
Therefore, she has directly indulged in the offence of money
laundering as defined under Section 3 PMLA, 2002 being
actually involved in the process of money laundering by way of
possession, concealment, use, acquisition and projecting the
proceeds of crime as untainted property.
As per the findings of the investigation, it can be inferred that
Saumya Chaurasia has directly acquired “proceeds of crime”

as defined under Section 2(l)(u) PMLA, 2002 to an extent of
more than Rs 30 crores. ED’s investigation makes it evident
that although all the money of extortion on coal & iron pellet
transportation was collected by the syndicate of Suryakant
Tiwari, he was not the final beneficiary of this scam. He did
utilise large amounts of money for purchasing benami assets,
but big chunks of the money were transferred to Saumya
Chaurasia, spent on political funding and transferred as per the
instructions of higher powers.

Mr Manish Upadhyay, a relative of Mr Suryakant Tiwari, is a
close associate of both Mrs Saumya Chaurasia & Mr Suryakant
Tiwari. ED investigation has established that Mr Manish
Upadhyay was inserted in as an extra layer of protection for
cash dealings between Mr Suryakant Tiwari and Mrs Saumya

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 43 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
Chaurasia. He used to transport cash from Mr Suryakant
Tiwari to Mrs Saumya Chaurasia.

ED investigation has established that Mrs Saumya Chaurasia
and her family went on a spree of acquiring immovable assets
during the period which coincided with the coal levy scam.
These assets of which she is the real beneficial owner were
identified and attached by issuance of provisional attachment
orders(s) as detailed in succeeding paragraphs.”

20. The evidence relating to strong relations between the
appellant and Mr Suryakant Tiwari, between the appellant and
Mr Manish Upadhyay, and between the appellant and Mr
Anurag Chaurasia; the evidences of movement of funds
acquired out of extortion syndicate run by Mr Suryakant Tiwari
to Manish Upadhyay, proxy of the appellant; the utilisation of
proceeds of crime and acquisition of properties by the appellant
in the name of her mother Shanti Devi and cousin Mr Anurag
Chaurasia along with the details of the said properties, etc.
have been detailed in the said prosecution complaint, which
leave no doubt in the mind of the Court that prima facie the
appellant has been found involved in the commission of the
offence of money laundering as defined in Section 3 of the said
Act.

21. The next question that falls for consideration before the
Court is whether the appellant being a woman should be
granted the benefit of the first proviso to Section 45 PMLA,
which reads as under:

“45. Offences to be cognizable and non-bailable.–(1)
* * *
Provided that a person who is under the age of sixteen years or
is a woman or is sick or infirm [or is accused either on his own
or along with other co-accused of money-laundering a sum of
less than one crore rupees], may be released on bail, if the
Special Court so directs:..”

87. Moreover, it is pertinent to mention here that the word used in the

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 44 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
proviso to Section 45 of the PMLA is „may‟ which indicates that it is the
discretion of the Court concerned and it is not a mandate. As observed by the
Hon‟ble Supreme Court in a catena of judgments, it is the discretion of the
Court and all the other relevant factors are needed to be weighed in while
adjudicating the bail application. The relevant factors include the gravity of
the offence, likelihood of reoccurrence, criminal antecedents etc.

88. In view of the foregoing, this Court holds that the applicant cannot
claim the benefit of the monetary threshold exemption under the proviso to
Section 45 of the PMLA.

89. The entire scheme of laundering illicit funds, as uncovered by the
investigation, extends far beyond the threshold of one crore rupees, and the
applicant’s role must be assessed in the broader context of the criminal
conspiracy in which he actively participated.

90. It is evident that an entire syndicate with established network and
properly defined roles exist and operates at different levels, which, when
taken into consideration in entirety clearly establish that the proceeds of
crime are more than Rs. 1 Crore, and thus, the proviso is not applicable in
the present case.

91. Now this Court shall decide as to whether the applicant satisfies the
twin conditions of bail under Section 45 of the PMLA.

92. It is well settled, as reiterated by the Hon‟ble Supreme Court in Vijay
Madanlal Choudhary (Supra) and Manish Sisodia v. Enforcement
Directorate, 2024 SCC OnLine SC 2274, that while the stringent twin
conditions under Section 45 of the PMLA restrict the right to bail, they do

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 45 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
not impose an absolute bar. The discretion of the court in granting bail
remains judicial and must be exercised in accordance with the settled legal
principles. The governing principle that “bail is the rule, and jail is the
exception” must be harmonized with the legislative mandate that requires
satisfaction of the conditions laid down under Section 45 before bail can be
granted.

93. In the present case, the respondent has placed on record material
indicating the applicant‟s active involvement in the procurement and sale of
spurious anti-cancer medicines, the proceeds of which were funneled
through various channels, including formal banking and hawala
transactions. The grounds of arrest, along with financial records and
electronic evidence, establish a prima facie case of money laundering. The
applicant‟s role in the laundering of illicit proceeds through his firm, M/s
Delhi Medicine Hub, stands corroborated by the investigative findings,
including statements under Section 50 of the PMLA and independent
documentary evidence.

94. The applicant has failed to discharge the burden placed upon him
under Section 45(1)(ii) of the PMLA, which requires him to establish that
there are reasonable grounds for believing that he is not guilty of the
offence. The material produced by the respondent, including financial
transactions linked to the proceeds of crime and the applicant‟s own
admissions, points to his direct and active involvement in the offence. Mere
assertions that the applicant was a passive investor and was unaware of the
illegality of the transactions do not satisfy the threshold required to

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 46 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
overcome the presumption under the PMLA.

95. Further, the second limb of Section 45(1)(ii) of the PMLA, which
mandates that the applicant must satisfy the Court that he is not likely to
commit any offence while on bail, is also not met.

96. The nature of the offence, involving a sophisticated network for the
distribution of counterfeit medicines targeting vulnerable patients,
demonstrates a potential for reoffending if bail is granted. The involvement
of multiple entities and associates in the fraudulent scheme raises a genuine
apprehension that the applicant, if released, may influence witnesses and
tamper with evidence, thereby jeopardizing the ongoing investigation.

97. In view of the facts and circumstances, this Court finds that the twin
conditions prescribed under Section 45 of the PMLA have not been satisfied.
The evidence on record, the ongoing nature of the investigation, and the
applicant‟s alleged role in the broader financial syndicate indicate that the
rigors of Section 45 continue to apply.

98. The present bail application has also been filed under Section 439 of
the CrPC, therefore, this Court, while considering the plea for bail, deems it
necessary to evaluate the applicant‟s case through well-established
principles governing the grant of bail under the said provision.
Notwithstanding the rigors of Section 45 of the PMLA, the courts have
consistently applied the „triple test‟ as a guiding framework while
considering bail applications under special statutes, including the PMLA.

99. The triple test, derived from Section 439 of the CrPC, consists of the
various parameters. First, whether the accused is likely to abscond or evade

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 47 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
the process of law if released on bail. Given the nature of offences under the
PMLA, which often involve complex financial transactions and cross-border
elements, the potential for absconding is a significant concern. Second,
whether the accused, if released, is likely to influence witnesses or tamper
with evidence. In money laundering cases, where the trail of proceeds of
crime is intricate and dependent on multiple records and statements, the
possibility of interference with ongoing investigations remains high, and
third, whether there is a reasonable apprehension that the accused may
indulge in similar offences if granted bail, thereby prejudicing the ongoing
investigation and endangering public interest.

100. In Satender Kumar Antil v. CBI, (2022) 10 SCC 51, the Hon‟ble
Supreme Court has held that while granting bail, the gravity of the
allegations must be taken into account.

101. Applying the aforesaid principle to the present case, this Court finds
that the gravity of the allegations against the applicant is of a serious nature,
involving the alleged laundering of proceeds derived from the sale of
spurious anti-cancer medicines. The offence not only entails significant
financial implications but also poses a grave risk to public health and safety.

102. As observed in the foregoing paragraphs, but not being repeated for
the sake of brevity, the applicant in the present case is alleged to have played
an active role in the procurement, distribution, and financial management of
the illicit business.

103. The evidence on record, including financial transactions and digital
communications, suggests a well-orchestrated operation which demands a

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 48 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
higher threshold of scrutiny before granting bail. The investigating agency
has highlighted the potential risk of the applicant tampering with evidence
and influencing witnesses, thereby affecting the integrity of the ongoing
investigation.

104. In the present case, the applicant has failed to demonstrate that his
release would not pose a risk to the investigative process. The applicant‟s
financial dealings, the intricate network of the accused persons, and the
continuing investigation reinforce the respondent‟s concerns regarding the
potential for obstruction of justice.

105. In the present case, the applicant has failed to demonstrate that his
release would not pose a risk to the investigative process. The applicant‟s
financial dealings, the intricate network of the accused persons, and the
continuing investigation reinforce the respondent’s concerns regarding the
potential for obstruction of justice.

106. Thus, in addition to failing to fall under the proviso to Section 45 of
the PMLA and satisfy the twin conditions under Section 45(1) of the PMLA;
the applicant also fails to meet the general considerations under the triple
test for the grant of bail. Consequently, the applicant‟s continued detention is
warranted to ensure the integrity of the investigation and prevent any
potential misuse of the judicial process.

107. Having dealt with all the issues, this Court is of the view that
considering the filing of the first supplementary prosecution complaint and
the ongoing nature of the investigation, this Court is not satisfied that the
applicant has fulfilled the twin conditions under Section 45 of PMLA. The

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 49 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
respondent has presented sufficient material to warrant further investigation,
including financial records, electronic evidence, and statements of co-
accused implicating the applicant. These materials suggest an active
involvement in laundering proceeds of crime and a pattern of financial
transactions that need further investigation.

108. The ongoing investigation is an extensive and meticulous effort by the
investigating agency to unearth a broader nexus of financial misconduct and
uncover deeper layers of the alleged offence. As new evidence continues to
emerge, it may further solidify the allegations against the applicant. The
complexity of the financial trail and its potential societal and national
ramifications require continued custodial interrogation.

109. In light of the above discussions on facts and law, it is held that the
applicant has been unable to put forth any propositions before this Court that
are sufficient for grant of bail and thus, the same are rejected. In view of the
same, this Court is not inclined to release the applicant on bail and the
instant application, is, hereby, dismissed along with the pending
applications, if any.

110. The applicant, if on interim bail, is directed to surrender before the
Court concerned within a period of seven days from today and the
sureties/bail bond, if any shall stand discharged. If the applicant fails to
surrender as directed, the investigating agency shall take appropriate steps to
take the applicant in custody to secure his presence.

111. It is made clear that any observations made herein are only for the
purpose of deciding the present petition and shall not be construed as an

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 50 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25
expression on the merits of the case. 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.

112. The order will be uploaded on the website forthwith.

CHANDRA DHARI SINGH, J
JANUARY 28, 2025
rk/ryp/mk
Click here to check corrigendum, if any

Signature Not Verified
Digitally Signed BAIL APPLN. 3776/2024 Page 51 of 51
By:GAURAV SHARMA
Signing Date:29.01.2025
16:51:25

[ad_1]

Source link

Shiv Narain Pd. Mishra vs The State Of Bihar And Ors on 30 August, 2025

Bharatvarshiya Digamber Jain Tirth … vs Jain Shwetamber Society on 18 August, 2025

Tulsi Devi vs The State Of Madhya Pradesh on 14 August, 2025

30.08.2025 vs Khasi Hills Autonomous District … on 30 August, 2025

Nishi Singla vs State Of Punjab And Others on 28 August, 2025

Shiv Narain Pd. Mishra vs The State Of Bihar And Ors on 30 August, 2025

Bharatvarshiya Digamber Jain Tirth … vs Jain Shwetamber Society on 18 August, 2025

Tulsi Devi vs The State Of Madhya Pradesh on 14 August, 2025

30.08.2025 vs Khasi Hills Autonomous District … on 30 August, 2025

Nishi Singla vs State Of Punjab And Others on 28 August, 2025

Rajesh Kumar vs Directorate Of Enforcement on 28 January, 2025

Delhi High Court

Rajesh Kumar vs Directorate Of Enforcement on 28 January, 2025

Author: Chandra Dhari Singh

Bench: Chandra Dhari Singh

LEAVE A REPLY Cancel reply

About us

Company

Top Stories

Now Is the Time to Think About Your Small-Business Success

Program Will Lend $10M to Detroit Minority Businesses

Kansas City Has a Massive Array of Big National Companies

Subscribe