Delhi High Court Denies Bail in Money Laundering Case Involving Sale of Spurious Anti-Cancer Drugs; Holds That “Generated Proceeds of Crime Were Transferred to Associates and the Applicant Played a Significant Role”

Court’s Decision

The Delhi High Court, in its order dated January 28, 2025, dismissed the bail application filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), Section 439 of the Code of Criminal Procedure, 1973 (CrPC), and Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA).

The court held that:

1. The applicant’s involvement in money laundering was well substantiated through financial records, digital evidence, and statements recorded under Section 50 of the PMLA.
2. The arrest was carried out in compliance with Section 19 of the PMLA, which mandates recording of “reason to believe” before making an arrest.
3. Statements recorded under Section 50 of the PMLA are valid evidence and are admissible in a court of law.
4. The applicant failed to rebut the presumption under Section 24 of the PMLA, which presumes involvement in money laundering once proceeds of crime are linked to an individual.
5. Since the applicant could not satisfy the mandatory twin conditions for bail under Section 45 of the PMLA, the bail application was dismissed.

Facts of the Case

1. Registration of FIR:
   • On March 12, 2024, FIR No. 59/2024 was registered at Crime Branch, Delhi under Sections 274, 275, 276, 420, 468, 471 read with 120B and 34 of the IPC.
   • The complaint alleged the illegal procurement, manufacture, and sale of spurious anti-cancer medicines.
2. Allegations in the FIR:
   • The primary accused (not the applicant) allegedly procured empty vials and raw materials of anti-cancer drugs like Keytruda and Opdyta.
   • These counterfeit drugs were manufactured and distributed to unsuspecting cancer patients.
3. Raids and Seizures:
   • On March 11, 2024, multiple raids were conducted across Delhi-NCR, leading to:
     • Seizure of large quantities of counterfeit medicines.
     • Confiscation of raw materials, empty vials, and packaging equipment.
4. Role of the Applicant:
   • The applicant was allegedly in contact with the primary accused since 2020.
   • He is accused of purchasing spurious anti-cancer injections from a co-accused without proper billing and documentation.
   • Proceeds of crime amounting to Rs. 7,45,000/- were allegedly deposited into multiple bank accounts linked to the applicant.
5. Investigation by Enforcement Directorate (ED):
   • On March 16, 2024, the ED initiated ECIR/DLZO-II/03/2024 under Sections 3 and 4 of the PMLA.
   • Initially, the applicant was treated as a witness, but later, in the first supplementary prosecution complaint dated July 20, 2024, he was named as Accused No. 9.
6. Arrest and Bail Proceedings:
   • The applicant was arrested by the ED on May 22, 2024, and his interim bail application was rejected.
   • However, the Delhi High Court granted interim bail on humanitarian grounds on September 12, 2024.
   • A regular bail application was filed before the Special Judge but was dismissed on October 15, 2024.
   • This led to the present bail application before the Delhi High Court.

Issues Before the Court

1. Was the applicant’s arrest conducted in compliance with Section 19 of the PMLA?
2. Can statements recorded under Section 50 of the PMLA be the sole basis for implicating the applicant?
3. Is the applicant eligible for bail under the relaxed conditions of the proviso to Section 45 of the PMLA?
4. Do the proceeds of crime attributed to the applicant constitute money laundering under Section 3 of the PMLA?
5. Does the presumption under Section 24 of the PMLA apply in this case?

Petitioner’s Arguments

1. Quantum of Proceeds of Crime Below Rs. 1 Crore:
   • The applicant argued that his proceeds of crime amount to Rs. 7,45,000/-, which is below the Rs. 1 Crore threshold under the proviso to Section 45 of the PMLA.
   • Thus, the twin conditions of Section 45 should not apply to him.
2. Lack of Mens Rea (Intent to Commit a Crime):
   • The applicant claimed he had no intent to commit money laundering.
   • He believed the medicines were genuine and purchased them as part of his business.
3. Not Named in the Predicate Offence:
   • The applicant was not an accused in FIR No. 59/2024, which is the scheduled offence under IPC.
   • Therefore, his prosecution under PMLA is unwarranted.
4. Statements Under Section 50 of PMLA Are Inadmissible:
   • The entire case against him relies on statements recorded under Section 50, which are allegedly inadmissible under Article 20(2) of the Constitution.
5. Arrest Was Illegal Under Section 19 of PMLA:
   • The applicant contended that his arrest was conducted without proper “reason to believe” as mandated under Section 19.
6. Right to Speedy Trial (Article 21):
   • The prosecution complaint was filed on June 6, 2024, but proceedings were delayed.
   • The applicant argued that prolonged incarceration violated his fundamental right to a speedy trial.
7. Humanitarian Grounds:
   • The applicant’s father suffers from Grade IV carcinogenic brain tumor, and his previous bail was granted for this reason.

Respondent’s Arguments (ED)

1. Active Role in Money Laundering:
   • The applicant was actively involved in the illegal distribution of spurious drugs and facilitated transactions amounting to Rs. 42 Lakhs.
2. Not Entitled to Bail Under Section 45 of the PMLA:
   • The twin conditions for bail under Section 45 were not met.
3. Prior Criminal History:
   • The applicant was previously arrested in FIR No. 394/2021 for hoarding medicines during the COVID-19 pandemic.
4. Risk of Tampering With Evidence:
   • The applicant has substantial financial resources and could influence key witnesses.
5. Statements Under Section 50 Are Valid Evidence:
   • The Supreme Court has repeatedly held that Section 50 statements are admissible.

Analysis of the Law

1. Compliance With Section 19 of PMLA:
   • The court held that the applicant’s arrest complied with Section 19, which mandates that the officer must record “reason to believe” before making an arrest.
2. Admissibility of Section 50 Statements:
   • The court cited Supreme Court judgments confirming that statements under Section 50 of PMLA are admissible.
3. Presumption Under Section 24 of PMLA:
   • The burden of proof shifts to the accused once proceeds of crime are traced to them.
   • The applicant failed to rebut this presumption.

Court’s Final Conclusion

• The applicant’s financial transactions were significant, linking him directly to the crime.
• He played a crucial role in distributing counterfeit drugs.
• His own statements and digital records established his involvement.
• Since he failed to satisfy the conditions for bail under Section 45, his bail plea was dismissed.

Implications of the Judgment

1. Strengthens the legal framework under PMLA by reinforcing strict bail conditions.
2. Clarifies that statements under Section 50 of PMLA are admissible.
3. Prevents economic offenders from exploiting loopholes in the law.

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