Delhi High Court holds ‘flow of liberty cannot be dammed’ over satisfying twin conditions under PMLA for bail

The two are accused of money laundering, which stems from a charge sheet filed by the Serious Fraud Investigation Office (SFIO), an investigative agency under the Ministry of Corporate Affairs. The agency alleged that funds were circulated to infuse capital, buy property, and for other personal purposes not intended by the banks. The promoters, directors, and officials of BSL prepared “forged” documents and made fraudulent representations before the banks to discount letters of credit and “diverted” the funds back into their own companies, it alleged.

The ED also alleged that public funds to the tune of Rs. 45,818 crore was siphoned off. One of the accused, Pankaj Kumar Tiwari, was working as vice president (Finance) with BSL and was arrested on January 11, 2024, after being arraigned as an accused in a supplementary prosecution complaint. Tiwari allegedly was involved in creating fraudulent documents for availing letter of credit (LC) facility with a consortium of banks.

The second accused, Pankaj Kumar, was employed as vice president (accounts) in BSL and was allegedly involved in manipulating accounts to inflate stock-in-transit and create bogus debtors, and was also arrested the same day. The investigation was initiated in 2019, and the prosecution named 156 accused and cited 82 witnesses, with 2.5 lakh pages of documents that needed to be analysed.

The court of Justice Manoj Ohri observed in its order, “When there are multiple accused persons, lacs of pages of evidence to assess, scores of witnesses to be examined, the trial is not expected to end anytime in the near future. Importantly, the delay being not attributable to the accused, keeping the accused in custody by using Section 45 PMLA as a tool for incarceration is not permissible. Flow of liberty cannot be dammed by Section 45 without taking all other germane considerations into account.”

“It is the duty of Constitutional Courts to champion the constitutional cause of Liberty and uphold the majesty of Article 21. Thus, where it is evident that the trial is not likely to conclude in a reasonable time, Section 45 cannot be allowed to become a shackle which leads to unreasonably long detention of the accused persons. What is reasonable and unreasonable would have to be assessed in light of the maximum and minimum sentences provided for in the statute. In cases under the PMLA that, except in a few exceptional cases, the maximum sentence can be seven years. The same has to be kept in mind while considering the period of incarceration which has been undergone,” it added.

While granting bail to the two, the court also took into account that the trial in the predicate, as well as the ED complaint, was yet to commence and would take some time to conclude and that the main accused and other similarly placed co-accused persons were already out on bail.