The Calcutta High Court has refused to grant regular bail to a senior Sahara Group executive accused in a money laundering case arising out of the alleged diversion of proceeds generated through undervalued sale of company assets, holding that the stringent twin conditions prescribed under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA) were not satisfied.
The bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar emphasized that economic offences involving large-scale public deposit scams are “a class apart” and warrant a strict approach while considering bail.
The bench also directed the ED to expedite the supplementary investigation and take effective steps to secure the presence of absconding accused persons.
The prosecution case stems from an extensive investigation into alleged financial irregularities involving Humara India Credit Cooperative Society Ltd. (HICCSL) and other entities associated with the Sahara Group. According to the ED, the investigation originated from more than 500 FIRs registered across different States, over 300 of which involve scheduled offences under the PMLA.
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The agency alleges that the cooperative societies collected deposits from thousands of small investors by promising attractive returns but subsequently failed to repay them upon maturity. Instead, the funds were allegedly diverted through complex intra-group transactions, resulting in the creation of benami assets and the concealment of the proceeds of crime.
The ED alleged that the petitioner occupied a senior position in the Sahara Group’s Chairman’s Core Management (CCM) and Crisis Management Team (CMT). According to the prosecution, digital evidence, encrypted communications and seized corporate records indicated his active involvement in facilitating the sale of a 32-acre land parcel belonging to Sahara Prime City Limited at Berhampur, Odisha.
The investigation further alleged that the sale was executed through a revoked board resolution in violation of directions issued by the Supreme Court in the Sahara matter. The ED claimed that the properties were deliberately undervalued and that an unaccounted cash component amounting to ₹76.29 crore across multiple city properties was siphoned off, thereby generating fresh proceeds of crime under the PMLA.
Senior counsel appearing for the petitioner contended that the accused was merely a salaried employee without ownership interest, policymaking authority or executive signing powers within the Sahara Group.
The defence argued that the petitioner was not named in the predicate FIRs. He had no role in collection of public deposits. The electronic evidence relied upon by the ED suffered from procedural defects relating to seizure and admissibility. The alleged property transactions merely represented attempts to generate corporate liquidity and could not constitute proceeds of crime. The petitioner had already spent over a year in custody. His advanced age and cardiac ailments justified grant of bail under the medical proviso to Section 45 of the PMLA. Bail should also be granted on grounds of parity with a co-accused who had already been released.
Opposing the bail plea, the ED maintained that the petitioner was not a peripheral employee but a key executive responsible for implementing decisions at the highest level of the organisation.
The agency argued that the Supreme Court had created a transparent mechanism for liquidation of Sahara assets to repay depositors, but the petitioner and others allegedly circumvented those directions by executing undervalued private sales and diverting substantial cash outside the approved refund mechanism.
The ED further submitted that forensic extraction of electronic records allegedly revealed detailed entries of unrecorded cash aggregating ₹76.29 crore arising from sale of properties situated across 28 cities. According to the agency, the investigation remains at a crucial stage, particularly because several principal accused are absconding abroad and tracing domestic and international money trails is still underway.
The High Court observed that the petitioner’s attempt to portray the disputed transactions as ordinary corporate measures ignored the allegedly fraudulent structure of the entire operation.
The Bench noted that the Supreme Court’s directions permitting liquidation of Sahara assets were intended to safeguard the interests of millions of depositors and could not be used as a mechanism to facilitate undervalued asset sales or diversion of funds.
According to the Court, the allegations relating to undervalued land sales, use of revoked board resolutions and siphoning of unaccounted cash, if established, squarely attract the offence of money laundering under Section 3 of the PMLA rather than constituting mere administrative lapses.
Reiterating the statutory restrictions governing bail under the PMLA, the Court held that Section 45 requires the Court to be satisfied that there are reasonable grounds to believe the accused is not guilty and is unlikely to commit any offence while on bail.
The Bench observed that Supreme Court precedents have consistently treated economic offences involving public deposit scams as distinct from ordinary criminal cases because they undermine public financial confidence.
The Court found that the petitioner had failed to produce material sufficient to displace the statutory presumption required under Section 45. It also rejected the argument that alleged procedural defects in the arrest or seizure automatically diluted the applicability of the twin conditions at the pre-trial stage, particularly where the investigation was supported by digital evidence and ongoing financial tracing.
The Court further held that the petitioner’s age, medical condition and period of incarceration could not outweigh the larger public interest involved in investigating an alleged multi-crore public deposit fraud.
It observed that the medical issues raised were capable of being managed within the correctional home and that the plea of parity with another accused was inapplicable because the petitioner allegedly occupied a significantly higher position within the organisational hierarchy.
The Bench also expressed concern that releasing the petitioner while several principal accused remain absconding could jeopardize the investigation by creating risks of witness intimidation, evidence manipulation and interference with the money trail.
Finding no change in circumstances since rejection of the earlier bail application, the Calcutta High Court upheld the Special Court’s order refusing bail and dismissed the petition.
The Court additionally directed the Enforcement Directorate to proactively secure the presence of the remaining absconding accused and ensure that the supplementary investigation and trial before the Special Court proceed expeditiously.
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