The Delhi High Court has held that statements recorded under Section 50 of the Prevention of Money Laundering Act (PMLA) while the accused are in custody cannot be treated as voluntary and are therefore inadmissible if self-incriminatory.
The bench of Justice Girish Kathpalia used this principle to critically examine the Enforcement Directorate’s (ED) case in an alleged spurious anti-cancer drug racket, ultimately favouring grant of bail.
BUY NOW: 50+ PMLA JUDGEMENTS : CASE LAWS
The case originates from a March 2024 investigation by the Delhi Police Crime Branch into a syndicate allegedly engaged in manufacturing and selling spurious cancer drugs. Based on raids conducted in Delhi, authorities claimed that empty vials of expensive cancer medicines such as Keytruda and Opdyta were being refilled with other substances and sold in the market.
Subsequently, the ED initiated proceedings under PMLA, alleging that the accused were involved in generating “proceeds of crime” through the sale of such counterfeit drugs. The prosecution claimed recovery of over ₹70 lakh in cash and traced financial transactions through bank accounts and alleged hawala channels.
However, while examining the bail applications, the Court undertook a detailed analysis of the legal framework governing bail under Section 45 of PMLA. It reiterated that bail in such cases is subject to the stringent “twin conditions”—the Court must be satisfied that the accused is not guilty and is unlikely to commit any offence while on bail.
Despite acknowledging the seriousness of the allegations, the Court emphasized that mere gravity of offence cannot substitute the requirement of credible material. It held that the ED must first establish foundational facts—namely, existence of a scheduled offence, generation of proceeds of crime, and involvement of the accused in money laundering activities.
A crucial turning point in the judgment was the Court’s treatment of statements recorded under Section 50 of PMLA. Relying on recent Supreme Court precedents, the Court held that self-incriminatory statements recorded while the accused were in custody are inadmissible, as they lack voluntariness and may be hit by Section 25 of the Evidence Act. The Court noted that such statements appeared “copy-paste” and could not be safely relied upon at the stage of bail.
The Court also found that WhatsApp chats relied upon by the ED were, at best, indicative of routine business communication and insufficient to curtail personal liberty. It cautioned against over-reliance on such material without corroboration.
Importantly, the Court highlighted several investigative gaps. It observed that the ED failed to examine key aspects such as the role of hospitals or medical professionals from where empty vials were allegedly sourced, the absence of complaints from patients regarding ineffective or harmful drugs, and lack of comprehensive forensic analysis of the seized medicines. Notably, many tested samples were found to contain genuine drugs, raising doubts about the prosecution’s claims.
The Court further noted that some accused persons had already been granted bail in the predicate offence, while others were not even chargesheeted in that underlying case. It also took into account the relatively small amounts attributed to individual accused and the prolonged period of incarceration, in some cases exceeding two years.
The Court questioned whether continued detention was justified, especially when the ED itself sought additional time to complete investigation. It underscored that liberty cannot be denied indefinitely on the basis of incomplete or inconclusive evidence.
Case Details
Case Title: Pravez Khan Versus ED
Citation: JURISHOUR-1104-HC-2026(DEL)
Case No.: BAIL APPLN. 4618/2024, CRL.M.A. 37776/2024, CRL.M.(BAIL) 2134/2024 & 2360/2025
Date: 04.05.2026
Counsel For Petitioner: Madhav Khurana, Sr. Advocate
Counsel For Respondent: Arkaj Kumar, Standing Counsel
Read More: Income Tax Notice: Key Reasons Why Taxpayers Receive I-T Notices and How to Respond?
