The Supreme Court has granted bail to in a money laundering case involving alleged proceeds of crime of ₹6,210.72 crore, holding that the stringent twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA), cannot override the constitutional safeguards under Article 21 when prolonged incarceration is coupled with an unlikely early conclusion of trial.
A Bench of Justice Aravind Kumar and Justice Vipul M. Pancholi observed that the accused had spent over 20 months in custody, the investigation concerning him was complete, and the extensive documentary and oral evidence made an early conclusion of the proceedings improbable.
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However, the Court rejected his separate contention that a five-day delay in forwarding the arrest order and supporting material to the Adjudicating Authority under Section 19(2) of the PMLA rendered his arrest illegal.
The judgment arose from the accused’s challenge to the Calcutta High Court’s order dated November 14, 2025, rejecting his application for regular bail under Section 439 of the Code of Criminal Procedure, 1973, read with Section 45 of the PMLA.
The dispute originated in the corporate insolvency resolution process initiated against Concast Steel and Power Limited on November 7, 2017. The company subsequently went into liquidation.
On October 8, 2021, the liquidator filed an application under Sections 43, 45 and 66 of the Insolvency and Bankruptcy Code, 2016, alleging fraudulent and avoidable transactions by the company’s management during or before the insolvency proceedings. The National Company Law Tribunal dismissed the application through a detailed order, which was not challenged.
The Central Bureau of Investigation subsequently registered an FIR on September 6, 2022, invoking Sections 120B, 420 and 477A of the Indian Penal Code and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. The Enforcement Directorate registered its ECIR on March 24, 2023.
According to the prosecution’s allegations recorded in the judgment, accused orchestrated transactions to inflate turnover, obtain credit from a consortium of banks led by the State Bank of India, and divert funds for personal enrichment through 62 shell companies.
The alleged proceeds of crime amounted to ₹6,210.72 crore, of which ₹777.10 crore had been attached under the PMLA. The prosecution alleged that 34 persons were made dummy directors and that 20 companies were managed by accused’s relatives.
The ED arrested accused on December 18, 2024. While considering his bail plea, the Supreme Court recorded that he had remained in custody for over 20 months against a maximum prescribed punishment of seven years.
These allegations remain subject to trial, and the Court expressly clarified that its observations were not findings on the merits.
Accused’s counsel argued that the arrest was vitiated by non-compliance with Sections 19(1) and 19(2) of the PMLA. In particular, the defence relied on the five-day interval between the arrest and the forwarding of the arrest order and material to the Adjudicating Authority.
The defence also submitted that the grounds of arrest and the recorded reasons to believe were substantially identical, indicating an alleged lack of independent application of mind.
On continued detention, counsel pointed out that the ED filed its prosecution complaint on February 15, 2025, stating that the investigation concerning accused was complete. Supplementary prosecution complaints followed on July 11, 2025, and July 1, 2026.
The defence described proceedings involving 97 accused persons, 48 prosecution witnesses and approximately 15,000 pages of relied-upon documents. Investigation concerning other accused persons was stated to be continuing. It argued that the scale of the proceedings made an early trial unrealistic.
Opposing bail, the ED submitted that accused had been produced before the competent court within 24 hours of arrest and that the statutory safeguards had been followed.
It argued that the authorised officer possessed relevant material, recorded reasons to believe in writing, and supplied the grounds of arrest. The agency maintained that forwarding the material on December 23, 2024, following the December 18 arrest did not automatically invalidate the arrest or subsequent remand.
The ED also disputed that similarity between the grounds of arrest and reasons to believe established prejudice. It emphasised the seriousness and financial scale of the allegations.
Five-Day Forwarding Delay Did Not Invalidate Arrest
The Supreme Court rejected the argument that the five-day delay, by itself, rendered the arrest unlawful.
The Bench explained that the PMLA does not prescribe a fixed number of hours for forwarding the arrest order and material to the Adjudicating Authority. It held that the requirement must be understood in light of the need for expeditious transmission and the practical work involved in compiling substantial records.
Where the material runs into thousands of pages, the arresting officer may require time to collect, organise and forward it. Administrative requirements may also take a few days.
The Court nevertheless qualified its reasoning: any intervening time must be confined to what is absolutely necessary. On the facts before it, the five-day interval did not establish a violation that invalidated accused’s arrest.
The Bench acknowledged that large economic offences can have serious consequences for the country’s financial system and that this explains the stringent conditions imposed by special legislation such as the PMLA.
At the same time, it stressed the investigating institutions’ responsibility to act expeditiously. The seriousness of the accusation could not justify keeping an accused in custody indefinitely while proceedings remained pending.
The Court stated: “Process must not be turned into a punishment unto itself.”
It found that the magnitude of the case made an early conclusion of trial impossible. The investigation concerning the accused had been completed, and his continued detention would serve no useful purpose in the circumstances.
The Bench also referred to the trial court’s task of examining thousands of pages of documents and extensive witness evidence. It concluded that the accused should not remain incarcerated throughout that prolonged process.
The Court reiterated that the twin conditions under Section 45 of the PMLA cannot override the constitutional safeguards guaranteed by Article 21.
The Bench held that allowing prolonged incarceration to continue in these circumstances would undermine those safeguards.
The decision therefore granted bail on the basis of the duration of custody, completion of the investigation concerning the accused, and the likely length of the trial, while rejecting the separate challenge based on delayed forwarding of arrest-related material.
The Supreme Court directed the accused’s release on bail upon furnishing bail bonds to the satisfaction of the trial court and complying with any additional conditions imposed by it.
The accused must deposit his passport with the trial court and cannot leave India during the trial without its prior permission. He must also refrain from influencing witnesses or tampering with evidence.
The trial court remains free to cancel bail if these conditions are breached. The Supreme Court expressly stated that its observations must not be treated as findings on the merits of the prosecution case.
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