Delhi High Court Grants Bail To Two Accused In PFI Money Laundering Case, Says ED Failed To Establish Payments Were 'Proceeds Of Crime'

The Delhi High Court has granted bail to two alleged Physical Education trainers of the Popular Front of India (PFI) in a money laundering case, holding that the Enforcement Directorate (ED) failed to prima facie establish that the payments received by them constituted “proceeds of crime” under the Prevention of Money Laundering Act (PMLA). [2026 LiveLaw (Del) 628]Justice Purushaindra Kumar Kaurav observed that the alleged remuneration paid for conducting physical training, before PFI was declared an unlawful association, could not by itself be treated as proceeds of crime in the absence of an accomplished scheduled offence.The Court granted bail to Anshad Badruddin and Abdul Khader Puttur who were arrested by the ED in March, 2024, in connection with an ECIR arising out of the NIA's investigation into the alleged activities of PFI.The applicants were not named in the original prosecution complaint filed by the ED and were arraigned as accused for the first time in the fifth supplementary prosecution complaint. It was alleged that they had worked as Physical Education trainers for PFI and had received money from the organisation in that capacity. ED alleged that both applicants served as PE trainers and used physical education sessions as a facade to impart weapons training to PFI cadres, including training in the use of swords, sickles and other weapons, with the objective of promoting unlawful and violent activities. Granting bail to them, the Court observed that the fact that the money travelled into the their personal accounts, rather than into an intermediate organisational account, does not by itself convert an otherwise unproved sum into proceeds of crime.The Court said that the case set up by ED qua the applicants suffered from infirmity and that neither of them is an accused in the predicate offence. “….the character of the PE training imparted by the applicants, whatever its true nature may ultimately be found to be at trial, cannot, at this prima facie stage, be equated with an “accomplished” scheduled offence from which the payments received by the applicants can be said to be “derived”, so as to clothe such payments with the character of proceeds of crime under Section 2(1)(u) of the PMLA,” the Court said. Further, the Court said that even taking ED's material at its highest, it would, at best, go to establish that the applicants participated in an activity that may itself require to be tested as a scheduled offence at trial and does not, without more, establish that the remuneration received by them was generated as a result of a scheduled offence. “To hold otherwise would be to permit the ED to proceed on the same premise that was expressly disapproved of in Parvez Ahmed , namely, that funds said to have been utilised for, or connected with, the future or continuing commission of a scheduled offence can, without further foundation, be treated as proceeds of that offence. The case set up by the ED, to that extent, once again puts the cart before the horse,” the Court said. Besides the merits of the case, the Court placed reliance on the applicants' prolonged incarceration. It observed that both had remained in custody for over two years and three months, charges were yet to be framed and there was no realistic possibility of the trial concluding in the near future.Title: ANSHAD BADRUDDIN v. ED and other connected matterCitation: 2026 LiveLaw (Del) 628Click here to read order

Delhi High Court Grants Bail To Two Accused In PFI Money Laundering Case, Says ED Failed To Establish Payments Were 'Proceeds Of Crime'

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Delhi High Court Grants Bail To Two Accused In PFI Money Laundering Case, Says ED Failed To Establish Payments Were 'Proceeds Of Crime'

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