Delhi High Court Grants Bail Where Proceeds-of-Crime Link Is Not Established

A single-judge bench of Justice Neena Bansal Krishna heard a petition under Section 439 CrPC read with Sections 45 and 65 of the Prevention of Money Laundering Act (PMLA) filed by an accused in ECIR No. ECIR/STF/17/2022 seeking regular bail from custody in a money‑laundering probe arising out of multiple NIA and state FIRs alleging an organisational nexus between the Popular Front of India (PFI) and the Social Democratic Party of India (SDPI).

The High Court allowed the bail application and held that the mandatory twin conditions of Section 45 PMLA were satisfied on the material on record. The judge found that the petitioner’s name appeared for the first time only in the 7th supplementary prosecution complaint, that there was no prima facie material showing that the funds in question were “proceeds of crime” derived “as a result of” a scheduled offence, and that prolonged pre‑trial detention in a voluminous, nascent prosecution would amount to pre‑trial punishment. The Court, in its reasoning, observed: “To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, ‘as a result of’ criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the case (crime) concerned, it may still not be proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act... It is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence that can be regarded as proceeds of crime.” The Court also recorded that “mere association of the Applicant with an organization or holding a position in an organization, without specific and concrete evidence of personal involvement in money laundering activities, cannot constitute an offence under Section 3 of PMLA.”

Background The Enforcement Directorate (ED) registered ECIR/STF/17/2022 based on an NIA FIR (RC‑14/2022/NIA/DLI dated 13.04.2022) arising from investigations into PFI and related entities for alleged scheduled offences under IPC, UAPA, Explosives Act and Arms Act. The ED lodged multiple prosecution complaints and successive supplementary complaints and passed numerous provisional attachment orders and property attachments. The ED alleged a PFI–SDPI nexus, deposits totalling over Rs. 32.94 crore in SDPI accounts (68% in cash), and that SDPI functioned as a front through which proceeds of crime were routed. The petitioner was arrested on 03.03.2025 at IGI Airport and was named for the first time in the ED’s 7th supplementary prosecution complaint dated 15.06.2025; he was not named in the predicate NIA chargesheet filed in March 2023.

Counsel for the petitioner argued lack of any money‑trail linking the accused to proceeds of crime, absence of his name in earlier complaints and the predicate chargesheet, parity with several co‑accused who had been granted bail, and prolonged incarceration (around 11 months) without prospect of early trial conclusion. The ED opposed bail, emphasising the seriousness of alleged offences, the petitioner’s erstwhile positions in PFI and SDPI, allegations of cross‑border fundraising, and the risk of tampering with evidence or influencing witnesses. The Court examined precedent including Vijay Madanlal Choudhary and the recent jurisprudence on the interplay of Section 45 PMLA and constitutional rights, observed that “Bail is the rule and Jail is the exception,” and concluded that in the present facts the twin conditions under Section 45 were satisfied.

The Court directed release on regular bail subject to conditions: personal bond of Rs. 50,000 with one surety of like amount; surrender of passport or permission before travel abroad; furnishing active telephone numbers and permanent address to the IO; prohibition on leaving the country without court permission; prohibition on tampering with evidence or contacting prosecution witnesses; and usual attendance directions. The judgment clarified that observations made were confined to the bail application and would not influence the trial on merits.

Case Details: Case No.: BAIL APPLN. 3620/2025 Case Title: Moideen Kutty K @ M. K. Faizy v. Directorate of Enforcement Appearances: For the Petitioner(s): Mr. Siddharth Agarwal, Senior Advocate; Mr. Rajat Bhardwaj; Ms. Ankita M. Bhardwaj; Mr. Dushyant Chaudhary; Mohd. Fiyaz; Mr. Vishwajeet Singh; Mr. Siddharth Singh, Advocates. For the Respondent(s): Mr. Zoheb Hossain, Special Counsel; Mr. Vivek Gurnani, Panel Counsel; Mr. Pranjal Tripathi; Mr. Kartik Sabharwal; Mr. Kanishk Maurya, Advocates.