The Punjab and Haryana High Court has held that prolonged pre-trial incarceration, coupled with an unlikely prospect of the trial concluding within a reasonable time, can justify the grant of regular bail even in proceedings under the Prevention of Money Laundering Act, 2002 (PMLA).
The bench of Justice Sumeet Goel has observed that the stringent conditions contained in Section 45 of the PMLA cannot operate as an instrument of indefinite incarceration when such continued detention infringes the fundamental right to speedy trial guaranteed under Article 21 of the Constitution.
The central legal question before the Court was whether prolonged incarceration, by itself and in the factual circumstances of the case, could constitute a ground for granting regular bail despite the statutory rigours of Section 45 of the PMLA. The Court examined the issue through the constitutional guarantee of personal liberty and speedy trial under Article 21.
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The case arose from allegations concerning Universal Buildwell Private Limited (UBPL), a real estate company. According to the prosecution case, promoters and directors of the company, including the petitioner, had collected substantial amounts from home buyers and financial institutions for residential and commercial projects.
The Enforcement Directorate alleged that funds collected for the projects were diverted to intermediary entities and subsequently used for unrelated ventures, repayment of loans and acquisition of land and other assets. The prosecution alleged that companies including Buildcon Private Limited, Vanya Developers Private Limited and Universal Facility Private Limited were used in the alleged diversion and layering of funds.
The ED further alleged that the petitioner exercised control over several companies in the group, acted as an authorised signatory, signed cheques and Builder-Buyer Agreements, and participated in transactions concerning the assets and projects. The prosecution alleged that such activities facilitated the diversion, layering, possession and projection of alleged proceeds of crime as untainted property.
The allegations were disputed on behalf of the petitioner. His counsel argued, among other things, that he held only a small shareholding, was not the person who controlled or siphoned off the alleged proceeds of crime, and that no specific personal benefit from the alleged laundering had been established against him. The defence also relied on the financial difficulties faced by the real estate business and the resolution proceedings before the NCLT.
A significant factor considered by the High Court was the period of incarceration. The petitioner had been arrested on July 22, 2025 and had remained in custody for one year and 22 days by the time of the Court’s consideration. The ED’s investigation concerning the petitioner had already concluded and the prosecution complaint had been filed on September 19, 2025.
The Court noted that nothing had been placed on record to establish that further custodial interrogation of the petitioner was required or contemplated. This became particularly relevant while examining whether continued detention was necessary for the investigation or merely resulting in prolonged pre-trial incarceration.
The Court attached considerable significance to the stage of the proceedings. Despite the petitioner’s prolonged custody, the matter was still at the stage of cognizance before the trial court.
The prosecution proposed to examine 49 witnesses and had relied upon 90 documents running into more than 10,000 pages. In view of the magnitude of the evidence yet to be considered, the High Court concluded that the trial was unlikely to conclude in the foreseeable future.
This factor assumed particular importance because the petitioner was not seeking bail merely on the basis of a fixed period of incarceration. Rather, the Court examined the combined circumstances of the period already spent in custody, the stage of the trial, the volume of evidence, and the absence of a realistic prospect of an early conclusion.
The judgment extensively examined the relationship between prolonged incarceration and Article 21 of the Constitution.
The Court relied upon the Supreme Court’s jurisprudence beginning with Hussainara Khatoon, which recognised speedy trial as an essential component of the fundamental right to life and personal liberty. The High Court noted that a procedure depriving a person of liberty cannot be regarded as reasonable, fair and just if it does not ensure a reasonably expeditious trial.
The Court also referred to the principle that the State carries an obligation to proceed with a criminal prosecution with reasonable promptitude. An accused cannot be deprived of the right to speedy trial merely because he did not expressly demand an early trial.
Section 45 of the PMLA imposes stringent conditions for bail. Ordinarily, where the prosecution opposes bail, the Court must be satisfied that there are reasonable grounds for believing that the accused is not guilty and is unlikely to commit an offence while on bail.
However, the High Court emphasised that these statutory restrictions must operate within the constitutional framework.
Relying upon Supreme Court decisions including V. Senthil Balaji v. Directorate of Enforcement, the Court observed that the higher threshold for bail under special statutes carries with it a corresponding obligation upon the State to ensure expeditious trials. Inordinate delay and stringent bail conditions cannot operate together to justify incarceration for an unreasonably long period.
The Court stressed that Section 45 does not confer an unrestricted power upon the State to keep an accused incarcerated indefinitely where there is no realistic possibility of the trial concluding within a reasonable period.
One of the most important aspects of the ruling is the Court’s distinction between statutory bail requirements and the independent constitutional jurisdiction of a Constitutional Court.
The High Court held that when bail is sought on merits under the PMLA, the statutory rigours of Section 45 continue to apply. However, where the plea is founded upon prolonged incarceration and violation of Article 21, the constitutional protection of personal liberty cannot be reduced to a dead letter merely because the accused cannot satisfy the ordinary Section 45 test.
The Court reasoned that the relief in such circumstances is not based upon a relaxed interpretation of Section 45. Instead, it flows independently from the Constitution itself. Consequently, statutory restrictions cannot completely exclude the operation of constitutional remedies where continued detention becomes disproportionate and constitutionally impermissible.
The judgment also declined to establish a rigid mathematical formula for determining when incarceration becomes constitutionally excessive.
The Court held that there can be no universal rule that detention becomes unconstitutional automatically after a particular number of months or after completion of a specified fraction of the maximum sentence. The assessment must be contextual and based on the facts of each case.
Among the relevant factors identified by the Court are the prescribed sentence, the prima facie role and degree of culpability attributed to the accused, the stage of the proceedings, the outer limits for completion of the trial and, most importantly, the realistic prospects of the trial concluding within a reasonable time.
The Court observed that where a trial is proceeding at a snail’s pace, avoidable delay is apparent and the prospect of a timely verdict is effectively illusory, constitutional courts may intervene even if the accused has not completed the statutory one-half or one-third custody threshold contemplated under ordinary undertrial-release provisions.
The High Court also rejected the proposition that the classification of a case as an economic offence, by itself, should lead to indefinite incarceration.
The judgment recognised that allegations concerning cheating or defrauding homebuyers and generation of proceeds of crime are serious. The nature of the allegations, the manner in which the alleged offence was committed, the number of persons affected and the wider economic consequences are relevant considerations while deciding bail.
However, the Court made clear that the gravity of allegations cannot by itself justify prolonged incarceration where the trial is unlikely to conclude in the near future.
The Court relied upon Supreme Court jurisprudence emphasising that Article 21 applies irrespective of the nature of the alleged offence and that prolonged pre-trial detention cannot effectively be converted into punishment before conviction.
Another decisive consideration was the nature and status of the prosecution evidence.
The High Court noted that the investigation had been completed, the prosecution complaint had already been filed and the evidence relied upon by the ED was predominantly documentary and already in the custody of the investigating agency. The Court therefore found no substantive basis for apprehending that the petitioner could interfere with the prosecution evidence.
The Court also found no tangible material demonstrating that the petitioner was likely to abscond or evade the process of law if released on bail. Similarly, no sufficient material was placed before the Court showing that he was likely to influence prosecution witnesses.
Considering the totality of circumstances, the High Court held that the statutory fetters under Section 45 of the PMLA stood diluted in the present factual matrix in light of Article 21.
The Court particularly relied upon the combination of the petitioner’s one year and 22 days of custody, the procrastinated stage of the trial, the proposed examination of 49 witnesses, the 90 relied-upon documents running into more than 10,000 pages, the completion of investigation, and the absence of concrete material indicating a flight risk or possibility of witness tampering.
The Court consequently concluded that continued incarceration would not be justified merely by invoking the stringent statutory framework of the PMLA.
The High Court allowed the petition and directed that the petitioner be released on regular bail subject to appropriate conditions imposed by the concerned Special Judge/Duty Magistrate.
The conditions include that the petitioner shall not misuse the liberty granted, shall not tamper with oral or documentary evidence, shall not absent himself from proceedings without prior permission, and shall not commit any offence while on bail.
He was also directed to deposit his passport, furnish his cellphone number to the Investigating Officer and not change it without permission of the trial court. He was further directed not to delay the trial and to submit a monthly affidavit regarding his involvement in any offence after release.
Additionally, the Court required the petitioner to furnish a demand draft, fixed deposit receipt or bank guarantee of ₹20 lakh in favour of the Court releasing him on bail. The order makes clear that the Enforcement Directorate would remain at liberty to seek cancellation of bail in the event of breach of the conditions or upon showing sufficient cause.
The High Court clarified that its decision to grant bail should not be understood as an expression of opinion on the merits of the prosecution case.
The Court’s intervention was founded principally upon the constitutional consequences of prolonged pre-trial incarceration, the stage and likely duration of the trial, the completion of investigation and the absence of sufficient material showing a continuing need for custodial detention.
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