Citing Jurists Ulpian & Blackstone, P&H High Court Grants Bail In ED Case; Says Section 45 PMLA Can Be Relaxed Where Trial Is Prolonged

The Punjab and Haryana High Court has granted regular bail in a money laundering case arising from the alleged diversion of funds collected from homebuyers, holding that prolonged pre-trial incarceration can itself justify bail under the PMLA where there is no realistic prospect of the trial concluding within a reasonable time. [2026 LiveLaw (PH) 285]

Justice Sumeet Goel held that the twin conditions in Section 45 must yield in such circumstances, the relief resting "not upon a relaxed interpretation of the statute, but upon an independent, non-negotiable right stemming directly from Article 21", a right originating in the Constitution, "which is the Grundnorm", so that "no legislative enactment can erect a wall high enough to exclude the operation of constitutional remedies."

 The Court further observed that when judicial custody stretches across years without the realistic prospect of an early trial, "the prison wall ceases to serve as a vessel of lawful restraint and assumes the oppressive character of an un-adjudicated sentence", describing indefinite incarceration without immediate prospect of trial as "the judicial equivalent of the infamous Lettres de Cachet."

Justice Goel traced the principle to the Roman jurist Ulpian's maxim that a prison ought to be used for keeping men and not punishing them, to Clause 40 of Magna Carta, and to English jurist Sir William Blackstone's warning that confinement without swift trial is "a less public, a less striking, and therefore a more dangerous engine of arbitrary government."

The Constitutional Asymmetry

The Court framed the issue as whether long incarceration can by itself ground regular bail without meeting the rigours of Section 45 PMLA, and if so, on what parameters.

Answering it, the judgment identified what it called "a grave constitutional asymmetry" arising when an accused languishes in custody under the PMLA while the trial remains dormant or grinds along at a glacial pace. The constitutional justification for such stringent restrictions on liberty, the Court held, rests upon "the corresponding implied obligation of the prosecuting agency/State to ensure a fair and expeditious trial" — and where the State fails in that obligation, "continued incarceration ceases to derive its legitimacy from the statute alone."

 "The law abhors a condition where statutory provision(s) become an instrument of perpetual incarceration," added the Court.

Where a statute prescribes a higher threshold for bail, the Court added, the State's duty to conduct a swift trial "becomes correspondingly more onerous", and on its failure the Section 45 threshold "must give way to the constitutional imperative of freedom."

The Court relied on V. Senthil Balaji v. Deputy Director, Directorate of Enforcement, that inordinate delay and a higher bail threshold "cannot go together"; on Manish Sisodia v. Directorate of Enforcement, (2024) 12 SCC 660 and Padam Chand Jain v. Enforcement Directorate, 2025 SCC OnLine SC 1291, that Article 21 is the higher law which the twin conditions cannot override; on Kapil Wadhawan v. CBI and on Arvind Dham v. Directorate of Enforcement, 2026, that economic offences cannot be treated as a homogeneous class warranting blanket denial of bail.

How Long Is 'Prolonged'?

Turning to quantification, the Court held that jurisprudence "has rejected the notion that personal liberty can be governed by mathematical formulas or rigid, mechanical arithmetic", and drew a distinction between the statutory entitlement under Section 436-A CrPC / Section 479 BNSS and the broader constitutional power to grant bail.

The one-half or one-third thresholds in those provisions, it held, constitute the minimum statutory requirement for mandatory relief and "cannot be treated as a pre-condition for the exercise of Constitutional/inherent jurisdiction where the continued detention is otherwise rendered unjust or disproportionate." It was never the legislative intent of those provisions to define or restrict the concept of prolonged incarceration.

Consequently, where the trial is running at a snail's pace, the prosecution exhibits avoidable inertia and prospects of a timely verdict are illusory, the court is constitutionally mandated to declare the incarceration unduly prolonged and grant liberty "irrespective of whether the accused has completed the statutorily prescribed one-half/one-third period," said the Judge.

The assessment, the Court held, rests on a holistic, multi-factorial matrix, the minimum and maximum sentences prescribed, the prima facie role and degree of culpability attributed to the accused, any statutory outer limit for concluding proceedings, and most crucially the present stage of trial measured against real prospects of its conclusion. No exhaustive guidelines could be laid down, any such attempt being "a quixotic endeavour".

On Gravity

Notably, the ED had argued that the petitioner ought not to be released until the grievances of the homebuyers were effectively redressed, the mode of generation of proceeds of crime assuming heightened significance where they arise from cheating homebuyers.

The Court accepted that such allegations are serious and that the nature of the allegations, the manner of commission, the number of persons affected and the economic and societal ramifications are all legitimate considerations, but held that gravity "cannot ipso facto constitute a ground for indefinite or prolonged incarceration, particularly when the prospects of trial culminating in near future are very distant."

Relying on Javed Gulam Nabi Shaikh and Arvind Dham, the Court reiterated that the right to speedy trial applies irrespective of the nature or gravity of the offence, and that "the severity of the charge cannot be weaponised by the prosecution to justify procedural paralysis."

The ECIR was registered in 2021 and the ED alleges that Universal Buildwell Private Limited and its promoters, including the petitioner, collected substantial sums from homebuyers and financial institutions for residential and commercial projects, but diverted the funds to intermediary entities for unrelated land acquisitions and loan repayments; that funds were routed through a network of companies controlled by the petitioner, his father and his brother; that assets were transferred to conceal ownership and origin; and that units were oversold and mortgaged units sold without the lender's approval.

The ED relies on his statements under Section 50 PMLA admitting that he signed cheques and executed Builder-Buyer Agreements.

Senior Advocates Randeep S. Rai and Chetan Mittal, for the petitioner, argued that liability was being fastened on him purely by virtue of directorship; that he held only a minuscule shareholding; that no personal benefit had been identified and none of his own properties or accounts stood attached; and that the only sum attributed to him in the complaint, about ₹59.64 lakh, shown as dues to Director was a legitimate entitlement. It was also urged that the company's affairs were being dealt with under an approved NCLT resolution plan, and that he had been granted bail in the predicate offences.

Senior Advocate Zoheb Hossain, for the ED, contended that he was no sleeping Director but a promoter-Director and authorised signatory; that approximately ₹46 crore was diverted through one entity alone; and that he and his family had absconded in the predicate offences and been declared proclaimed offenders in some.

In the present case, the petitioner was arrested on 22.07.2025 and had been in judicial custody for one year and twenty-two days. Investigation stood concluded and the prosecution complaint was filed on 19.09.2025, with nothing to show that further custodial interrogation was required. The prosecution proposes to examine 49 witnesses and relies on 90 documents running to over 10,000 pages, while the case arising from a 2021 ECIR, remains at the stage of cognizance.

Finding no tangible material of flight risk, no list of vulnerable witnesses or basis for apprehending interference, the evidence being predominantly documentary and already with the ED, and the petitioner never having been declared a proclaimed offender in this ECIR, the Court held the fetters of Section 45 stood diluted in light of Article 21.

Bail was granted on conditions including deposit of passport, a demand draft, FDR or bank guarantee of ₹20 lakh, a monthly affidavit of non-involvement in any offence, and intimation of his cellphone number to the Investigating Officer, with liberty to the ED to seek cancellation on breach.

Case Title: Varun Puri v. Directorate of Enforcement

Appearances: Mr. Randeep S. Rai and Mr. Chetan Mittal, Senior Advocates with Ms. Rubina Virmani, Mr. Tarun Kumar Hooda and Ms. Shifali Goyal, Advocates for the petitioner;

Mr. Zoheb Hossain, Senior Advocate (through VC), Mr. Lokesh Narang, Senior Panel Counsel and Ms. Shubhleen Dhariwal, Advocate for the respondent-ED.

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