S.45 PMLA Turns Principle Of Bail Is Rule & Jail Is Exception 'On Its Head': Jharkhand HC Denies Bail In ₹750-Crore Fake GST Invoice Case

The Jharkhand High Court recently observed that Section 45 of the Prevention of Money Laundering Act (PMLA), with its twin conditions, “turns the principle of bail is the rule and jail is the exception on its head.”Justice Sujit Narayan Prasad made this observation while denying bail to an accused allegedly involved in the creation of fake companies for passing on ineligible input tax credit by issuing fake GST bills without any actual supply of goods or services. The petitioner, the son of the main accused, was said to be part of the conspiracy and one of the beneficiaries of the proceeds of crime generated by his father.Background: The petitioner primarily argued on two grounds: first, that the grounds of arrest were not supplied to him, rendering the arrest per se illegal; and second, that Section 45 of the PMLA had not been satisfied, warranting the grant of bail. The High Court noted that the safeguards under Section 19(1) are mandatory but held that the requirement had been satisfied in the present case. It observed:“…[I]t appears that arrest of the petitioner was made on 08.05.2025 under Section 19 of the Act 2002 after recording detail “reasons to believe” based on material which indicates the petitioner's involvement in the alleged crime…It is further evident that the contemporaneous record including the grounds of arrest and “reason to believe” documents bear the signature of the petitioner which stands as irrefutable proof of service and acknowledgement at the time of arrest”The Court also relied on the order of transit remand, which specifically noted that the grounds of arrest had been intimated to the accused persons. It therefore concluded that the arrest was not illegal and held:“90. Thus, from the aforesaid order it is evident that in the instant case after arrest immediately the petitioner was produced before the concerned court of learned Chief Judicial Magistrate at Calcutta and the ground of arrest and reason to believe has also been supplied to him by the Enforcement Directorate and in his presence the detail order was passed on 08.05.2025, hence, the ground cannot be taken on behalf of the petitioner that the ground of arrest and reason to believe has not been supplied and prejudice has been caused to him.”On the question of bail, the Court referred to Section 45 of the PMLA and noted that the Act prescribes that where bail is opposed, it should not be granted unless there are reasonable grounds for believing that the accused is not guilty of the offence and that he is not likely to commit any offence while on bail. In discussing the scope of Section 45 of the PMLA, the Court observed:“152. It is, thus, evident by taking into consideration the provision of Sections 19(1), 45(1) and 45(2) of PML Act, 2002 that the conditions provided therein are required to be considered while granting the benefit of regular bail in exercise of power conferred under statute apart from the twin conditions which has been provided under Section 45…Thus, Section 45 of the PML Act, 2002 turns the principle of bail is the rule and jail is the exception on its head…”The High Court noted that there were specific allegations against the petitioner that he was part of an organized syndicate operating through 135 shell companies for the issuance of bogus GST invoices involving input tax credit exceeding ₹750 crores. It observed that the petitioner was not a passive bystander but an active and knowing participant in the offence of money laundering. Thus, since the petitioner was found to be prima facie guilty, the Section 45 test was not satisfied, and bail could not be granted.In finally rejecting the bail application, the Court held that there was enough material to show that the petitioner was prima facie guilty and that his release would “send a wrong signal to society and embolden economic offenders.” Case Title: Mohit Deora v. Union of IndiaLL Citation: 2025 LiveLaw (Jha) 84Case No. B.A. No. 8051 of 2025Appearance: Mr. Indrajit Sinha and Mr. Rishav Kumar appeared for the Petitioner. Mr. Amit Kumar Das, Mr. Saurav Kumar, Mr. Varun Girdhar, and Mr. Manmohit Bhalla appeared for the Respondent.Click Here To Read/Download Order

S.45 PMLA Turns Principle Of Bail Is Rule & Jail Is Exception 'On Its Head': Jharkhand HC Denies Bail In ₹750-Crore Fake GST Invoice Case

Rushil Batra

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

S.45 PMLA Turns Principle Of Bail Is Rule & Jail Is Exception 'On Its Head': Jharkhand HC Denies Bail In ₹750-Crore Fake GST Invoice Case

Rushil Batra

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers