Supreme Court Sets Aside Patna HC Bail Order in PMLA Case, Remands Matter for Fresh Consideration

A bench of Justices Bela M. Trivedi and Prasanna B. Varale heard an appeal filed by the Enforcement Directorate challenging an order of the High Court of Judicature at Patna that had granted regular bail to the respondent in a money‑laundering prosecution arising out of alleged illegal mining and hawala transactions. The appeal contested the High Court's refusal to apply the mandatory twin conditions for bail under Section 45 of the Prevention of Money‑Laundering Act, 2002 (PMLA).

The Supreme Court allowed the appeal, held that the High Court had failed to apply the rigours of Section 45, set aside the impugned bail order and remanded the matter to the Patna High Court for fresh consideration by a different Bench. The Court emphasised that Section 45 carried an overriding effect and its twin conditions were mandatory before any bail could be granted in offences under Part A of the Schedule. The Court, in its reasoning, observed: “387………….The provision post the 2018 Amendment, is in the nature of no bail in relation to the offence of money laundering unless the twin conditions are fulfilled. The twin conditions are that there are reasonable grounds for believing that the accused is not guilty of offence of money laundering and that he is not likely to commit any offence while on bail. Considering the purposes and objects of the legislation in the form of the 2002 Act and the background in which it had been enacted owing to the commitment made to the international bodies and on their recommendations, it is plainly clear that it is a special legislation to deal with the subject of money laundering activities having transnational impact on the financial systems including sovereignty and integrity of the countries. This is not an ordinary offence. To deal with such serious offence, stringent measures are provided in the 2002 Act for prevention of money laundering and combating menace of money laundering.” The Court further observed that the impugned order was “in teeth of Section 45 of PMLA” and could not be sustained.

Background The Enforcement Directorate (ED) had registered an ECIR following some 20 FIRs in Patna, Saran and Bhojpur districts alleging illegal mining, use of unauthorised transport e‑challans and revenue loss of over Rs.161 crore. Investigations linked M/s Broad Son Commodities Pvt. Ltd and its directors to unauthorised sand sales and to a hawala network. Searches under Section 17 of the PMLA uncovered documents and materials from premises linked to Radha Charan Sah and his son, the respondent Kanhaiya Prasad. Statements of the respondent were recorded on 1 and 4 September 2023 under Section 50 of the PMLA; he was later arrested on 18 September 2023 and produced before the Special Court, which took cognizance on 10 November 2023 on a prosecution complaint under Sections 3 and 4 of the PMLA.

The Patna High Court allowed Criminal Miscellaneous No. 17738/2024 and released the respondent on regular bail. The ED challenged that order before the Supreme Court, contending that the High Court ignored the mandatory requirements of Section 45 — namely that the Public Prosecutor be given an opportunity to oppose and that the court be “satisfied that there are reasonable grounds for believing that he is not guilty” and that he is not likely to commit further offences while on bail. The respondent argued that the case against him relied on inadmissible Section 50 statements, that he had cooperated with the ED and had paid alleged tax dues.

The Supreme Court reviewed the statutory scheme, reproduced Section 45, and relied on the three‑Judge bench decision in Vijay Madanlal Choudhary v. Union of India, observing that Article 20(3) did not negate the summon and statement mechanism under Section 50. The Court found no recorded satisfaction by the High Court on the twin conditions and held that the bail order was therefore legally unsustainable. The Supreme Court set aside the High Court order, remanded the case for fresh consideration by a Bench other than the one which passed the impugned order, clarified that it expressed no opinion on merits, and directed that the respondent surrender before the Special Court within one week (declining to continue the previously granted bail).

Case Details: Case No.: CRIMINAL APPEAL NO. 728 OF 2025 (@ SPECIAL LEAVE PETITION (Crl.) No. 7140 OF 2024) Case Title: The Union of India through the Assistant Director v. Kanhaiya Prasad Appearances: For the Petitioner(s): Mr. Zoheb Hussain (Advocate for Enforcement Directorate) For the Respondent(s): Mr. Ranjit Kumar (Senior Counsel for respondent)