“Crime Against Country's Economic Health, Has Cascading Effect on Taxpayers”: Jharkhand HC Denies Bail In Rs 522 Cr PMLA Case

As the applicant had miserably failed to satisfy the Court that reasonable grounds existed for believing that he was not guilty of the alleged offences, and in light of the “sophisticated modus operandi employed” by the organised syndicate in commission of the offences, Justice Sujit Narayan Prasad held,

“…the allegations levelled against the applicant are of an extremely grave and serious nature, striking at the very foundation of the country's economic and financial system. They pertain to fraudulent transactions running into hundreds of crores of rupees, executed through a complex and deliberate layering of illicit funds, and culminating in the acquisition and projection of properties derived from such tainted sources as untainted assets. The applicant's activities have been found to be indispensable to the layering and integration stages of the laundering process, involving multiple shell companies and bank accounts under his de facto control. Thus, the magnitude of the fraud, its organized nature, and the systematic siphoning of funds, the present case strikes at the core of the country's economic and financial fabric. The fraudulent availment and passing of fake ITC not only caused direct financial loss to the Government but also undermined the sanctity of the GST regime, which is based on self-declaration and trust.”

The Single Judge concluded,

“…it is considered view of this Court that granting bail to the applicant would send a wrong signal to society and embolden economic offenders, thereby undermining public confidence in the justice delivery system. The offence in question is not a mere fiscal offence but a crime against the economic health of the nation, with a cascading effect on honest taxpayers, market integrity, and state revenue, therefore, this Court is of the view that it is not a case where the prayer for bail is to be granted…”

Facts:

Initially, complaints were filed under multiple offences under the GST Act r/w the Integrated GST Act, 2017 r/w the IPC in the Court of Economic Offences against the applicant. Further, investigation was carried out under the Prevention of Money Laundering Act (PMLA) and the applicant was arrested by the Enforcement Directorate (ED) on 08.05.2025. Particular allegations against the applicant was that he was part of an organised syndicate operating through 135 shell companies for issuance of bogus GST-invoices exceeding Rs. 750 crores. The invoices were utilised to illegally avail Input Tax Credit (ITC) to various entities causing wrongful loss to the government exchequer. The proceeds of crime were layered through several accounts to project them as legitimate. It was also alleged that applicant had claimed fake ITC of Rs. 47.51 crores through the three companies, bank accounts of which, despite their GST registration being canceled, were actively used to launder proceeds of crime. The applicant also allegedly routed several crores through other associates and shell firms. The said funds were utilised towards purchase of high value immovable properties. The investigation on the operation of the syndicate was still underway.

Challenging his arrest and praying for bail, the applicant submitted that the arrest was illegal as the grounds of arrest and “reasons to believe” were not supplied in writing. Further, it was urged that statements of the co-accused recorded under Section 50, PMLA while in custody could not be used against the applicant. It was also argued that there was no material showing proceeds of crime or money laundering.

On the contrary, the ED submitted that the applicant had acted as the coordinator for 135 shell companies, facilitating fake invoices and laundering of proceeds. Further, it was argued that the arrest was legal as grounds of the arrest were duly supplied to the applicant, with the information being supplied to the applicant's friend.

Court's Findings:

Regarding the contention that the arrest was illegal, the Court referred to the Arrest Memo which recorded the details of the arrest and bore applicant's signature, thereby establishing compliance with Section 19 of PMLA—which gives the concerned officer power to arrest if he has “reason to believe” that the person is guilty based on material in possession with the ED, and further mandates that there should be reason to believe that the accused is guilty of the offence, with the reason recorded in writing and the grounds for arrest communicated with the accused. Further, the Court acknowledged that ED had informed the applicant about the grounds of arrest, presented him before the Magistrate within 24 hours, and also complied with the “reasons to believe” precondition.

“The applicant's signatures on the Arrest Memo, Grounds of Arrest, and Personal Search Memo stand as of service and contemporaneous documentary proof acknowledgment therefore, this Court is of the view that the argument which has been advanced on behalf of the learned counsel for the applicant is not tenable…” the Court held.

With respect to the argument that allegations levelled against the applicant cannot attract Section 3 of PMLA, the Court observed that based on the material available, the role of the applicant in the money-laundering allegation could not be negatived. In this backdrop, the Court held,

“…it appears that the applicant is directly indulged and is actually involved in all the activities connected with the offence of money laundering, i.e., use or acquisition, possession, concealment, and projecting or claiming as untainted property, as defined u/s 3 of PML Act, 2002. Further, the role of the applicant in the laundering of proceeds of crime generated out of the commission of scheduled offence has been discussed in detail in the prosecution complaint as the paragraphs abovementioned.”

With respect to the argument that imputation of applicant was based upon statement of co-accused— who was in custody, the Court held that there existed substantial evidence gathered during the investigation establishing the culpability of the applicant, and statements of other witnesses further corroborated the same. Reiterating that statements recorded under Section 50 hold evidentiary value and are admissible in legal proceedings, the Court concluded that the applicant was “actually involved in all the activities connected with the offence of money laundering, i.e., use or acquisition, possession, concealment, and projecting or claiming as untainted property.”

“The statements that were recorded from the witnesses during the investigation have been dealt with in prosecution complaint and many of the statements clearly implicate the applicant. Therefore, the statements that have been recorded from the witnesses and which has been relied upon, is also a strong material that prima facie establishes the offence of money laundering against the present applicant” the Court added.

Regarding the aspect of burden of proof in relation to proceeds of crime, the Court referred to Section 24 of PMLA, which envisages that once a person is charged with the offence of money laundering, the law presumes that the proceeds of crime are involved in money laundering unless the contrary is proven by the accused. As the investigating agency had relied on the statement of co-accused in support of the other evidences which indicated the applicant's active role in the money-laundering activities, and in the absence of any rebuttal by the applicant, the Court observed that the presumption under Section 24 stood in favour of the ED, and thus, the continued detention was justified.

The Court noted that substantial proceeds of the crime still remained untraced and the investigation into identification of the complete chain of transactions and assets acquired from illegal proceeds of crime was still pending, and granting bail would frustrate the statutory objective of tracing, attaching and ultimately confiscating the property derived as envisaged under PMLA.

Reiterating that economic offences involving huge loss of public funds constitute deep-rooted conspiracies which need to be dealt with an “iron-hand” particularly in light of them posing a threat to the financial health of the country, the Court dismissed the bail application.

Case Details:

Case Number: B.A. No. 7476 of 2025

Case Title: Amit Gupta v. Directorate of Enforcement

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