The Calcutta High Court has cancelled the regular bail granted to an accused in a high-value money laundering case linked to the Sahara Group, holding that the Special Court committed a “patent perversity” by overlooking mandatory statutory safeguards under the Prevention of Money Laundering Act, 2002 (PMLA).
The Bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar ruled that courts cannot dilute the stringent twin conditions under Section 45 of the PMLA merely by invoking personal liberty or relying on the absence of direct witness testimony.
The bench held that the bail order was legally unsustainable because it ignored substantial documentary evidence, misapplied settled principles governing PMLA cases, and failed to record satisfaction regarding the statutory requirements under Section 45 of the Act.
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The case arose from an Enforcement Directorate prosecution under Sections 3 and 4 of the PMLA. According to the ED, the investigation stemmed from the alleged diversion and laundering of funds generated during the sale of Sahara Group properties. The agency alleged that hundreds of crores of rupees collected from investors under various schemes were diverted through a network of shell entities, intermediaries, and cash transactions instead of being used for legitimate purposes.
The ED alleged that Jitendra Prasad Verma played a central operational role in facilitating illicit cash movements connected with the liquidation of Sahara Group properties. During searches conducted under Section 17 of the PMLA, investigators reportedly recovered physical and digital cash ledgers recording unaccounted transactions amounting to approximately ₹214.66 crore. The investigation also allegedly uncovered records showing cash movements of ₹76.29 crore across 28 cities and documents indicating that the accused received an illicit commission of ₹5.75 crore in connection with the transactions.
The Special Court had granted regular bail in November 2025 after observing that the accused was not an employee or director of the Sahara Group, that no depositor had directly implicated him through oral testimony, and that he had already spent 124 days in custody while investigations into the predicate offences had not progressed substantially.
The Enforcement Directorate argued before the High Court that the Special Court had completely ignored the mandatory framework under Section 45 of the PMLA. It submitted that the accused could not claim protection merely because he was not formally employed by the Sahara Group, as Section 3 of the Act covers anyone who directly or indirectly participates in laundering proceeds of crime.
The agency further contended that documentary evidence recovered during searches clearly demonstrated the accused’s active role in handling unaccounted cash generated through the sale of Sahara properties. It argued that the Special Court improperly focused on the absence of direct oral statements instead of evaluating the extensive documentary trail recovered during the investigation.
The ED also relied upon Supreme Court precedents including Vijay Madanlal Choudhary, Aditya Tripathi, Tarun Kumar, and Kanhaiya Prasad to argue that PMLA offences are independent of the status of predicate offences and that economic offences involving public funds must be treated with greater judicial caution.
The accused opposed cancellation of bail by arguing that he was merely an independent land broker facilitating property transactions pursuant to the Supreme Court’s directions governing Sahara property sales. It was contended that any violation of the Supreme Court’s sale conditions, if at all, would amount to contempt of court rather than money laundering.
The defence further argued that there were no supervening circumstances after the grant of bail, such as witness tampering, misuse of liberty, or absconding, which traditionally justify cancellation of bail. It also pointed out that the accused had complied with all bail conditions and had cooperated throughout the investigation.
The Division Bench undertook an elaborate discussion on the principles governing cancellation of bail. It observed that Indian criminal jurisprudence recognises two distinct grounds for cancelling bail.
The first involves post-release misconduct such as witness intimidation, tampering with evidence, absconding, or misuse of liberty. The Court acknowledged that no such supervening circumstances existed in the present case.
However, the Bench emphasised that the second and independent ground arises where the original bail order itself suffers from inherent perversity or violates mandatory statutory provisions. In such situations, the prosecution is not required to establish any misconduct after release because the order granting bail is legally unsustainable from the outset.
Applying these principles, the High Court held that the Special Court committed multiple legal errors.
It observed that the Special Court overlooked the Supreme Court’s directions governing the sale of Sahara properties, which required sales to occur above specified values and mandated deposit of sale proceeds into designated accounts for repayment of investors. According to the High Court, the allegations suggested that parallel cash transactions had been generated outside this framework, thereby potentially constituting fresh acts of money laundering rather than mere breaches of court directions.
The Bench also held that the Special Court incorrectly treated the accused’s status as an independent broker as insulating him from liability, despite the broad wording of Section 3 of the PMLA, which extends to any person directly or indirectly involved in handling proceeds of crime.
The High Court strongly criticised the Special Court for placing undue emphasis on the absence of direct oral testimony from depositors while disregarding documentary and digital evidence allegedly recovered during investigation.
The Bench observed that money laundering offences are ordinarily established through financial records, digital trails, ledgers, and transaction documents rather than eyewitness accounts. Once such material is recovered, the statutory presumption under Section 24 of the PMLA assumes significance, and courts must examine whether the accused has discharged the burden cast upon him.
Rejecting another basis of the bail order, the High Court reiterated that money laundering is an independent offence.
The Court held that delays in investigation, closure of a predicate FIR, or the accused not being named in the original scheduled offence cannot automatically weaken an independent prosecution under the PMLA. It observed that alleged handling and circulation of proceeds of crime may itself constitute a continuing offence attracting the provisions of the PMLA.
The Division Bench also rejected the reliance placed by the Special Court on the accused’s 124-day custody.
The Court held that while personal liberty under Article 21 remains a fundamental constitutional value, Parliament has imposed specific restrictions through Section 45 of the PMLA. Unless the statutory twin conditions are satisfied, general considerations regarding duration of custody cannot override the legislative mandate in serious economic offences affecting public funds.
The High Court held that money laundering under Section 3 of the PMLA is a standalone offence independent of the status of the predicate offence. Documentary and digital financial evidence assumes primary importance in money laundering prosecutions, and courts should not insist solely upon direct oral testimony. External brokers, intermediaries, and freelance facilitators may fall within the ambit of Section 3 if they knowingly participate in laundering proceeds of crime. Judicial discretion in granting bail under the PMLA remains subject to the mandatory twin conditions contained in Section 45 of the Act.
Holding that the bail order suffered from inherent perversity and violated Sections 24 and 45 of the PMLA, the Calcutta High Court set aside the order granting regular bail.
The Court directed the accused to surrender before the designated Special Court within 72 hours. It further ordered that if he failed to surrender within the stipulated period, the Enforcement Directorate would be at liberty to take him into custody in accordance with law.
The Court also rejected the request for stay of operation of its judgment made after pronouncement.
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