PMLA Bail Cannot Be Cancelled Without Supervening Circumstances; Mere Misapplication Of S.45 No Ground For Cancellation: J&K&L High Court
LIVELAW NEWS NETWORK
10 April 2026 5:50 PM IST
The Jammu & Kashmir and Ladakh High Court has held that an application seeking cancellation of bail granted under the Prevention of Money Laundering Act, 2002 cannot succeed merely on the ground that the trial court did not properly appreciate the rigour of Section 45 of the PMLA.
The Court clarified that bail once granted can only be cancelled if supervening circumstances such as misuse of liberty, violation of bail conditions, tampering with evidence, or procurement of bail by fraud or misrepresentation are established.
The Court was hearing an application filed by the Assistant Director, Directorate of Enforcement, under Section 483(3) BNSS (corresponding to Section 439(2) CrPC) read with Section 528 BNSS (corresponding to Section 482 CrPC), seeking cancellation of the bail granted to two accused in a PMLA case arising out of the alleged leakage of the J&K Services Selection Board (JKSSB) examination for the recruitment of Police Sub-Inspectors.
The bench of Justice M A Chowdhary observed,
“The applicant-Enforcement Directorate has not alleged or sought cancellation of bail granted in favour of the respondents for any supervening circumstances, which may have resulted into violation of conditions of bail or having made any attempt to tamper with the prosecution evidence in any manner.”
In the instant case the Enforcement Directorate registered an ECIR in 2023 based on an FIR registered by the CBI, Jammu under Sections 120-B and 420 IPC, relating to the leakage of the JKSSB examination for the recruitment of 1200 Sub-Inspectors of J&K Police. It was alleged that the accused, including the respondents, leaked the question paper for monetary benefits, charging approximately ₹10 lakhs per candidate. The proceeds of crime were estimated at about ₹2.52 Crore.
The respondents were arrested under Section 19 of the PMLA and subsequently the Special Judge, Anticorruption (CBI cases), designated as the Special Court under PMLA, granted bail to both respondents. Aggrieved by this order, the ED approached the High Court seeking cancellation of bail.
Court's Observation:
In order to adjudicate the matter the Court examined the legal position on cancellation of bail and referred to Dolat Ram v. State of Haryana, (1995) 1 SCC 349, wherein the Court noted that bail can be cancelled only on specific grounds ie interference or attempt to interfere with the due course of justice, evasion of justice, abuse of concession granted, possibility of absconding, likelihood of misuse of bail, or likelihood of tampering with evidence or threatening witnesses.
The Court observed that cancellation of bail is justified only when the accused has misused the liberty, flouted conditions of bail, when bail was granted in ignorance of statutory provisions, or when bail was procured by misrepresentation or fraud. The Court also relied upon Deepak Yadav v. State of U.P. (2022) and Neeru Yadav v. State of U.P., (2014) 16 SCC 508, reiterating that cancellation of bail requires very cogent and overwhelming circumstances, and that bail granted on merits cannot be cancelled in a mechanical manner without supervening circumstances.
The Court noted that the ED had not alleged any supervening circumstances such as violation of bail conditions, tampering with evidence, or influencing witnesses. The only grievance was that the Special Court had not properly considered the rigour of Section 45 of the PMLA, which requires the court to record satisfaction that there are reasonable grounds to believe the accused is not guilty and is not likely to commit any offence while on bail, the Court pointed.
The Court held that the Special Court had rightly applied the law laid down in Vijay Madanlal Choudhary v. Union of India and Ranjitsingh, and had concluded on the basis of broad probabilities that the prosecution had not been able to satisfy the rigours of Section 45 PMLA.
“.. In the considered opinion of this court, the Special Court has rightly came to the conclusion that the foundational facts which require to be considered in apropos to Section 45 of the PMLA of 2002 require to be satisfied by the prosecution and it has to produce the material by which the Court can draw satisfaction that there are reasonable grounds for believing that accused is guilty of such offence, and that he is likely to commit such offences while on bail”, the court remarked.
In view of the observations the Court dismissed the application seeking cancellation of bail and upheld the impugned order granting bail to the respondents.
Case Title: Assistant Director, Directorate of Enforcement v. Yatin Yadav & Anr.
Citation: 2026 LiveLaw (JKL) 150