Delhi High Court Denies Bail in Money Laundering Case: “Proceeds of Crime Inextricably Linked to the Syndicate” – Accused’s Role in Sale of Spurious Anti-Cancer Medicines and Hawala Transactions Justifies Continued Detention Under PMLA

Court’s Decision

The Delhi High Court dismissed the bail application of the petitioner, who was accused under the Prevention of Money Laundering Act, 2002 (PMLA), for laundering proceeds of crime from the sale of counterfeit anti-cancer medicines. The court held that:

1. There was prima facie material showing the applicant’s involvement in the illegal trade and laundering of proceeds.
2. The statutory presumption under Section 24 of the PMLA had not been rebutted by the applicant.
3. The twin conditions for bail under Section 45 of the PMLA had not been satisfied.
4. Granting bail would compromise the investigation given the organized nature of the crime and potential for evidence tampering.

The court, therefore, found no merit in granting bail and dismissed the application.

Facts

1. Registration of FIR:
   • An FIR (No. 59/2024) was registered on March 12, 2024, at the Crime Branch, Delhi, for offenses related to the illegal procurement, manufacture, and sale of counterfeit anti-cancer medicines, punishable under Sections 274, 275, 276, 420, 468, 471, 120B, and 34 of the Indian Penal Code (IPC).
   • The FIR was based on a complaint by SI Gulab Singh.
2. Allegations in the FIR:
   • The main accused, Viphil Jain and Suraj Shat, along with their associates, were involved in manufacturing and distributing counterfeit Keytruda and Opdyta injections.
   • These medicines were illegally procured, repackaged, and sold to unsuspecting cancer patients.
3. Police Investigation and Raids:
   • The police formed six teams and conducted simultaneous raids across Delhi-NCR on March 11, 2024.
   • A raid at DLF Capital Greens, Moti Nagar, New Delhi, led to the seizure of raw materials, counterfeit vials, and packaging equipment.
   • The accused were allegedly caught filling empty vials with unauthorized substances.
4. Involvement of Enforcement Directorate (ED):
   • The ED initiated ECIR/DLZO-II/03/2024 on March 16, 2024, under Sections 3 and 4 of PMLA to investigate money laundering based on the predicate offense in the FIR.
   • The Delhi Police filed a chargesheet on May 8, 2024, under Sections 274, 275, 276, 308, 406, 420, 34, and 120B of the IPC.
   • The applicant was not named in this initial chargesheet.
5. Summons and Arrest of Applicant:
   • The applicant was summoned under Section 50 of PMLA multiple times before being arrested on July 9, 2024.
   • His name surfaced through statements of co-accused Akshay Kumar, who implicated him in financial transactions related to the crime.
   • The first supplementary prosecution complaint was filed on July 20, 2024, implicating 16 accused, including the applicant.
   • On September 21, 2024, the Special Judge took cognizance of the charges.
   • The applicant’s previous bail plea was rejected on October 4, 2024, leading to the current bail application.

Issues Considered by the Court

1. Was the applicant’s arrest under Section 19 of the PMLA lawful?
2. Can statements recorded under Section 50 of the PMLA be relied upon to justify the applicant’s detention?
3. Does the applicant qualify for exemption under the proviso to Section 45 of the PMLA?
4. Has the applicant satisfied the twin conditions under Section 45 of the PMLA for bail?

Petitioner’s Arguments

1. Illegal Arrest:
   • The applicant argued that his arrest violated Section 19 of the PMLA, which requires authorities to have a “reason to believe” before making an arrest.
   • He contended that the grounds of arrest were vague and did not specify any direct evidence against him.
2. Lack of Direct Evidence:
   • He claimed he was merely an investor in M/s Delhi Medicine Hub, with no role in its daily operations.
   • He denied any involvement in proceeds of crime.
3. Statements of Co-Accused Not Admissible:
   • The applicant contended that his arrest was based solely on statements of co-accused Akshay Kumar, which are inadmissible under the law.
4. Exemption from Section 45 Twin Conditions:
   • He argued that the money laundering offense involved less than ₹1 crore, which exempts him from the stringent bail conditions under Section 45 of PMLA.
5. No Prior Mention in Chargesheet:
   • The applicant was not named in the initial FIR or the chargesheet filed by the Delhi Police, and his name surfaced only through co-accused statements.
6. Investigation Complete, No Purpose in Detention:
   • He argued that since prosecution complaints had been filed, further detention was unnecessary.
   • He also claimed that the trial would be prolonged, making continued incarceration unjust.

Respondent’s Arguments (Directorate of Enforcement)

1. Seriousness of the Offense:
   • The ED argued that money laundering and the sale of spurious anti-cancer medicines posed grave public health risks.
   • The offense involved endangering patients’ lives, warranting strict legal action.
2. Active Involvement of the Applicant:
   • The applicant was not just an investor but was involved in financial management and transactions of M/s Delhi Medicine Hub.
   • He played an active role in laundering the proceeds of crime.
3. Use of Hawala and Concealment:
   • The financial trail showed illicit money transfers to family members and associates of other accused persons.
   • Transactions through hawala and third-party accounts confirmed his role in money laundering.
4. Failure to Satisfy Bail Conditions Under Section 45:
   • The applicant failed to show that he was not guilty of the offense or that he would not commit further crimes if granted bail.
5. Flight Risk and Evidence Tampering:
   • Given the high-value transactions and organized nature of the crime, there was a significant risk of witness tampering and destruction of evidence.
   • The applicant posed a flight risk.
6. ₹1 Crore Exemption Not Applicable:
   • The total proceeds of crime exceeded ₹1 crore, making the applicant ineligible for exemption under Section 45.

Court’s Analysis

1. Legality of Arrest (Section 19 of PMLA)

• The court held that the ED had valid “reasons to believe” and followed due procedure.
• The grounds of arrest detailed specific allegations, including financial records and transactions linking the applicant to money laundering.
• The court cited Vijay Madanlal Choudhary v. Union of India (2023) and V. Senthil Balaji v. State (2024) to reinforce that procedural safeguards were met.

2. Admissibility of Section 50 Statements

• Statements under Section 50 of PMLA are admissible in legal proceedings, as confirmed in Rohit Tandon v. ED (2018) and Abhishek Banerjee v. ED (2024).

3. Applicability of Section 45 Bail Conditions

• The applicant failed to satisfy the twin conditions under Section 45, which require:
  • Proving that he is not guilty.
  • Proving that he is unlikely to commit an offense while on bail.

4. Proceeds of Crime Above ₹1 Crore

• The court rejected the applicant’s argument for exemption, holding that his transactions were part of a larger syndicate exceeding ₹1 crore.

Conclusion

• The bail application was dismissed on the grounds that:
  • The applicant was directly involved in laundering illicit proceeds.
  • He failed to rebut the presumption of guilt under Section 24 of PMLA.
  • The twin conditions under Section 45 were not met.
  • Granting bail would compromise the integrity of the investigation.

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