Leadership Role In PFI Before It Was Banned Doesn't By Itself Attract PMLA: Delhi High Court

The Delhi High Court has held that merely holding a leadership position in the Popular Front of India (PFI) at a time when the organisation was lawful does not, by itself, constitute an offence of money laundering under PMLA.Justice Neena Bansal Krishna made the observation while granting bail to Moideen Kutty K @ M.K. Faizy, the National President of the Social Democratic Party of India (SDPI), in a case registered by the Enforcement Directorate (ED) alleging terror financing and money laundering linked to PFI.The Court noted that the ED's case against Faizy was essentially founded on “guilt by association”. It observed that Faizy's association with PFI between 2009 and 2018 was at a time when the organisation was not banned, and that SDPI, of which he is presently the national president, continues to be a lawful political party and has not been declared an unlawful association.“Mere occupancy of leadership positions in PFI, which was a lawful organization during the Applicant‟s association from 2009 to 2018. The Petitioner as Member of SDPI thus, separated much prior to PFI been declared as a banned Organization on 28.09.2022. SDPI which continues to be a lawful political party not declared unlawful by the Government, does not, without more, constitute the offence of money laundering,” the Court held.It added,“The Applicant may have at one point of time be a founding Member of PFI since 2015 and remained a member till 2018, but that or that he may be a National President of SDPI, but these allegations in itself are not enough to prima facie make out a case of laundering the proceeds of crime. Mere association of the Applicant with an organization or holding a position in an organization, without specific and concrete evidence of personal involvement in money laundering activities, cannot constitute an offence under Section 3 of PMLA.”The only allegation against the Petitioner was that funds were collected in the accounts of PFI/SDPI from unknown sources, for commission of illegal and unauthorized activities constituting scheduled offences.The Court however observed that allegations of fund collection from unknown sources, even if irregular or illegal under some other law, would not automatically amount to money laundering unless the money was shown to be derived from criminal activity relating to a scheduled offence. It said,“The money being received from unknown sources may be getting utilized for various activities, but that per se does not make the donations, money etc. as the proceeds of crime under the scheme of PMLA. The offence committed by the collection of funds, may be an offence under any law including the scheduled offence, but cannot be termed as proceeds of crime under Section 3 of PMLA.”In the case at hand, it noted, there was prima facie no evidence that the funds being received are generated from commission of any scheduled offence.As such, holding that the stringent twin conditions under Section 45 of PMLA stood satisfied, the Court granted bail.Appearance: Mr. Siddharth Agarwal, Senior Advocate, Mr. Raj at Bhardwaj, Ms. Ankita M Bhardwaj, Mr. Dushyant Chaudhary, Mohd. Fiyaz, Mr. Vishwajeet Singh and Mr. Siddharth Singh, Advocates for Petitioner; Mr. Zoheb Hossain, Special Counsel with Mr. Vivek Gurnani, Panel Counsel, Mr. Pranjal Tripathi, Mr. Kartik Sabharwal and Mr. Kanishk Maurya, Advocates for RespondentCase title: Moideen Kutty K @ M. K. Faizy v. EDCitation: 2026 LiveLaw (Del) 203Case no.: BAIL APPLN. 3620/2025Click here to read order

Leadership Role In PFI Before It Was Banned Doesn't By Itself Attract PMLA: Delhi High Court

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Leadership Role In PFI Before It Was Banned Doesn't By Itself Attract PMLA: Delhi High Court

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