BAIL APPLN. 4709/2025 Page 1 of 28

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 26.05.2026

Judgment pronounced on: 30.05.2026

Judgment uploaded on: 30.05.2026

+ BAIL APPLN. 4709/2025

DINESH GUPTA .....Petitioner

Through: Mr. N. Hariharan and Mr.

Madhav Khurana, Senior

Advocates with Mr. Yash Varma,

Ms. Vani Gupta, Mr. Raghav

Bakshi, Mr. Arjan Mandla, Mr.

Teeksh Singhal, Ms. Deeparghya

Datta, Mr. Aman Akhthar, Ms.

Vasundhara N., Ms. Vasundhara

Raj Tyagi, Ms. Punya Rekha

Angara and Ms. Sana Singh,

Advocates

versus

DIRECTORATE OF ENFORCEMENT .....Respondent

Through: Mr. Vivek Gurnani, Panel

Counsel for ED with Mr. Kanishk

Maurya, Advocate

CORAM:

HON’BLE DR. JUSTICE SWARANA KANTA SHARMA

JUDGMENT

DR. SWARANA KANTA SHARMA, J

1. By way of this application, the applicant seeks grant of regular

bail in case arising out of CT Case No. 40/2025, titled „Directorate of

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Enforcement vs. Dinesh Gupta & Ors.‟, arising out of ECIR/HIU-

1/15/2025, for offence under Sections 3/4 of the Prevention of Money

Laundering Act, 2002 [hereafter „PMLA‟].

FACTUAL BACKGROUND

2. Briefly stated, the facts of the present case are that one FIR

bearing no. RC2232020A0008 dated 02.11.2020 was registered by

the Central Bureau of Investigation [hereafter „CBI‟], Anti-

Corruption Branch-V, New Delhi, for commission of offence under

Sections 403, 420, 467, 468, 471 read with Section 120B of the

Indian Penal Code, 1860 [hereafter „IPC‟] and Section 13(2) read

with Section 13(1)(d) of the Prevention of Corruption Act, 1988

[hereafter „PC Act‟] against M/s Best Foods Ltd., its Chairman Sh.

Mohinder Pal Jindal (since deceased), Managing Director Sh. Dinesh

Gupta (the applicant herein), and other unknown persons. The FIR

arose from a complaint lodged by State Bank of India alleging

fraudulent diversion and siphoning of bank funds, submission of

forged and fabricated documents, criminal breach of trust and misuse

of loan facilities obtained from a consortium of banks led by State

Bank of India.

3. As per the prosecution case, M/s Best Foods Ltd., engaged in

the business of processing and export of Basmati rice, had availed

substantial credit facilities including working capital limits, term

loans and export-related facilities from the consortium banks on the

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basis of project reports, financial statements and stock records which

were allegedly false and misleading. It is alleged that instead of

utilizing the loan amounts for legitimate business purposes, the

accused persons diverted and routed the funds through shell and

related entities, created fictitious purchase and sale transactions,

manipulated stock statements and inflated turnover in order to siphon

off the loan proceeds. The loan account was ultimately declared as

Non-Performing Asset (NPA), with an outstanding liability of about

₹1,740.30 crore towards the consortium banks. The prosecution

further alleges that forged invoices and false stock valuation reports

were periodically submitted to the lending banks to obtain drawing

power against non-existent stock, and that the diverted funds were

layered and rotated through multiple entities and banking channels so

as to conceal their origin and nature. It is also alleged that certain

unknown bank officials had facilitated the continuation of such

transactions by failing to exercise due diligence.

4. Since the offences alleged in the aforesaid FIR constitute

scheduled offences under the PMLA, the Directorate of Enforcement

[hereafter „DoE‟] recorded the present ECIR bearing no. ECIR/HIU-

1/15/2025, dated 07.07.2025, to investigate the laundering of

proceeds of crime arising out of the scheduled offences. However,

during investigation, it was noticed that an earlier ECIR bearing no.

ECIR/CDZO-II/07/2022 had also been recorded by the Chandigarh

Zonal Office-II of the DoE on the basis of the same predicate FIR,

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which was subsequently merged with the present ECIR in order to

avoid overlapping investigations and multiplicity of proceedings.

5. As per the prosecution complaint filed by the DoE, in a

nutshell, the investigation conducted under the PMLA revealed

material indicating systematic siphoning and diversion of public

funds, circular routing of loan amounts through associated and

benami entities, fabrication of business records and laundering of

proceeds of crime through banking channels and cash withdrawals.

The DoE, in this regard, places reliance on analysis of bank accounts,

forensic audit reports, seizure of documents and statements recorded

under Section 50 of PMLA. Further, as alleged, substantial proceeds

of crime have been identified and provisionally attached under

Section 5 of PMLA. While investigation qua the role of the present

applicant is stated to be complete, further investigation is stated to be

continuing with regard to tracing additional beneficiaries and

utilization of the diverted funds.

6. Insofar as the investigation with respect to the role of the

present applicant is concerned, it is the case of the DoE that the

applicant, being the Managing Director and key controlling person of

M/s Best Foods Ltd., was in overall control of the affairs and

financial operations of the company and had allegedly orchestrated

the diversion and laundering of loan funds obtained from the

consortium banks. As per the prosecution complaint, the applicant

had fraudulently availed credit facilities by using inflated stock

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statements, fabricated invoices, bogus debtors and fictitious trading

transactions, and thereafter diverted and layered the funds through a

network of shell and benami entities allegedly created in the names of

employees, relatives and other persons acting under his instructions.

It is further alleged that substantial amounts of the loan funds were

diverted to entities such as M/s Homestead Infrastructure

Development Pvt. Ltd. and M/s Golden Peacock Residence Pvt. Ltd.,

which were allegedly controlled by the applicant and were unrelated

to the business activities of M/s Best Foods Ltd. The DoE further

alleges that funds were routed through multiple dummy entities and

large cash withdrawals amounting to about ₹72.76 crore were made

in order to conceal the money trail. It is also alleged that even after

commencement of liquidation proceedings against M/s Best Foods

Ltd., the applicant continued to deal with and utilize proceeds of

crime through front entities and benami transactions. Thus, as

alleged, the investigation reveals the involvement of the applicant in

the generation, diversion, concealment and projection of proceeds of

crime as untainted property.

7. During the course of investigation, searches under Section 17

of the PMLA were conducted from 15.07.2025 to 17.07.2025 at

various residential and official premises of the applicant and M/s Best

Foods Ltd. Thereafter, summons were issued to the applicant for

appearance before the DoE on 18.07.2025, 23.07.2025 and

28.07.2025, however, he did not appear and cited ill-health. The

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applicant eventually appeared before the DoE on 08.08.2025 and his

statement under Section 50 of the PMLA was recorded, following

which he was arrested in the present case. Subsequently, on

04.10.2025, the prosecution complaint under Section 44 of the

PMLA was filed before the learned Special Court (CBI)-20, Rouse

Avenue Courts, Delhi [hereafter „Special Court‟] arraying the

applicant and six companies/entities as accused persons.

8. The regular bail application of the present applicant was

dismissed by the learned Special Court vide impugned order dated

01.11.2025. The cognizance of the alleged offence of money

laundering, as defined under Section 3 read with Section 70 of the

PMLA, punishable under Section 4 of the PMLA, was taken by the

learned Special Court vide order dated 29.11.2025.

THE APPLICANT’S CASE

9. On behalf of the applicant, it has been stated that M/s Best

Foods Ltd. was a well-established company engaged in processing

and export of Basmati rice under the brand name “BEST” and had

substantial manufacturing and processing capacity with a pan-India

presence. It is stated that in anticipation of expansion of business and

expected increase in domestic and international demand, the

company had undertaken significant capital expenditure towards

enhancement of production capacity, automation and modernization

of its facilities, for which credit facilities were availed from a

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consortium of banks led by State Bank of India. It is the case of the

applicant that the company had availed loans and credit facilities

aggregating to about ₹1,740 crore over a period of time, which were

secured against stocks, receivables and mortgaged properties.

According to the applicant, the company subsequently faced severe

financial stress on account of adverse market conditions, decline in

exports, fall in international demand, liquidity constraints, high

operational costs and debt servicing obligations, which ultimately

affected its cash flow and business operations.

10. The applicant further states that the consortium lenders had

constituted a Joint Lenders Forum (JLF), pursuant to which a forensic

audit was conducted by Grant Thornton for the period from

01.04.2013 to 30.11.2016. According to the applicant, the said

forensic audit did not find any direct or apparent evidence of

diversion or misutilization of bank funds during the aforesaid review

period. It is further stated that despite efforts for restructuring of the

company‟s debt, recovery proceedings were initiated against the

company and subsequently insolvency proceedings under the

Insolvency and Bankruptcy Code, 2016 [hereafter „IBC‟] were

initiated before the learned National Company Law Tribunal

(NCLT), Chandigarh, whereafter the company went into Corporate

Insolvency Resolution Process.

11. It is also the case of the applicant that despite the bank

accounts and affairs of the company no longer being under the

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control of the erstwhile management after commencement of

insolvency proceedings, State Bank of India proceeded to classify the

account of the company as “wilful defaulter” and thereafter as

“fraud” on the basis of another forensic audit report. The applicant

contends that such declaration was made without supplying the

relevant forensic audit report and in violation of principles of natural

justice. It is stated that the said action was challenged before the High

Court of Punjab and Haryana by way of a writ petition, by then

Chairman of M/s Best Foods Ltd. Sh. Mohinder Pal Jindal, wherein

interim protection against coercive action was granted.

12. It is further the case of the applicant that the predicate FIR

came to be registered on the basis of a complaint dated 06.08.2020

lodged by the Deputy General Manager, State Bank of India, SAMB,

Chandigarh alleging diversion and misappropriation of bank funds by

M/s Best Foods Ltd., its Chairman Sh. Mohinder Pal Jindal and the

present applicant during the period from 01.04.2015 to 31.03.2018,

thereby causing wrongful loss to the consortium banks. According to

the applicant, the FIR was primarily based on the forensic audit

report prepared by M/s Haribhakti & Co. LLP alleging inflation of

inventories, fudging of balance sheets and diversion of bank funds.

13. The applicant states that it was only after registration of the

FIR that he came to know that several consortium banks had also

classified the account of the company as “fraud”. It is further stated

that on the basis of the said predicate FIR, an ECIR was earlier

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registered by the Chandigarh Zonal Office of the DoE, however no

effective investigation was allegedly conducted therein.

14. It is further submitted that the issue regarding declaration of

accounts as “fraud” by banks under the RBI Master Circular dated

01.07.2016, and consequential criminal proceedings initiated on the

basis thereof, was under consideration before the High Court of

Punjab and Haryana in a batch of matters led by AGR Steel Strips

Pvt. Ltd. v. Reserve Bank of India & Ors., wherein the High Court, by

judgment dated 27.05.2024, had set aside such declarations of fraud,

on the ground of violation of principles of natural justice, and had

also quashed FIRs which had been registered solely on the basis of

such fraud declarations.

15. It is the case of the applicant that since the FIR registered by

the CBI against the applicant and other accused persons was also

based on the fraud declaration made by the consortium banks, an

application for amendment was moved in the pending writ petition

seeking challenge to the said FIR as well. It is stated that vide order

dated 12.12.2024, the High Court disposed of the writ petition while

permitting continuation of investigation by the CBI, however

directing that no final report be filed without further orders. It is also

stated that eventually, a batch of petitions pertaining to the issue in

question, was decided by the Hon‟ble Supreme Court in CBI v.

Surender Patwa: 2025 SCC OnLine SC 934, wherein the Supreme

Court held that the High Courts had exceeded their jurisdiction by

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quashing the FIRs and the subsequent criminal proceedings while

quashing the declarations of „fraud‟, and categorized cases arising out

of such fraud declarations. It is contended that the present case falls

within the category where investigation may continue, but no

coercive steps are required to be taken against the accused persons

during pendency of investigation.

16. It is further submitted on behalf of the applicant that on the

basis of the predicate offence and the CBI‟s RC, the DoE recorded

the second ECIR, i.e. the preset one, on 07.07.2025. According to the

applicant, the DoE has treated the entire loan amount of about ₹1,740

crore availed by M/s Best Foods Ltd. as “proceeds of crime”, despite

the complaint lodged by State Bank of India alleging wrongful

loss/outstanding liability to the extent of about ₹1,006 crore. It is

further stated that the earlier ECIR recorded by the Chandigarh Zonal

Office was subsequently merged with the present ECIR.

Arguments on behalf of the Applicant

17. In the above background, the learned senior counsel appearing

for the applicant argues that the arrest of the applicant by the DoE

was illegal, arbitrary and without any “need and necessity” as

required in law. It is submitted that an earlier ECIR on the basis of

the same predicate FIR had already been registered in the year 2022

by the Chandigarh Zonal Office of the DoE, however for more than

three years no summons were issued to the applicant and no effective

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investigation was carried out. It is contended that the present ECIR is

based on the same set of allegations and material as the earlier ECIR

and, therefore, there existed no fresh circumstance warranting arrest

of the applicant. It is further argued that the applicant had appeared

before the DoE and had joined investigation on 08.08.2025 for

recording of his statement under Section 50 of the PMLA, and thus

there was no justification for his arrest. Reliance in this regard has

been placed upon the judgment of the Hon‟ble Supreme Court in

Arvind Kejriwal v. Directorate of Enforcement: (2024) SCC Online

SC 3581 to contend that the arresting authority must record objective

satisfaction regarding the necessity of arrest. It is also argued that the

“reasons to believe” and grounds of arrest reflect non-application of

mind and are based on vague allegations that the applicant gave

evasive replies.

18. The learned senior counsel further argues that the DoE has

wrongly treated the entire credit facilities availed by M/s Best Foods

Limited amounting to about ₹1,740 crore as “proceeds of crime”,

despite the fact that the complaint lodged by State Bank of India itself

alleged diversion/misappropriation to the extent of about ₹1,006

crore only. It is submitted that the total outstanding liability includes

interest, penalties and other charges and, therefore, the entire

outstanding amount cannot be treated as proceeds of crime. It is also

argued that the forensic audit conducted by M/s Haribhakti & Co.

LLP pertained only to the review period from 01.04.2015 to

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31.03.2018, whereas another forensic audit conducted earlier by

Grant Thornton for the period from 01.04.2013 to 30.11.2016 had not

found any direct or apparent evidence of diversion or misutilization

of funds. It is further contended that the prosecution complaint filed

by the DoE is incomplete and premature inasmuch as, despite

alleging laundering of about ₹1,740 crore, the DoE has allegedly

been able to identify only about ₹325 crore as proceeds of crime.

19. It is further argued that the DoE has failed to establish

foundational facts necessary for invocation of the provisions of the

PMLA and that there are material inconsistencies between the case of

the CBI in the predicate offence and the case now sought to be

projected by the DoE. The learned senior counsel submits that the

review period identified in the forensic audit report of M/s Haribhakti

& Co. LLP, on the basis of which the predicate FIR came to be

registered, was from 01.04.2015 to 31.03.2018, whereas the DoE has

arbitrarily treated the “period of offence” as commencing from

01.04.2011 onwards. It is argued that the DoE could not have

enlarged the scope of allegations beyond the case set out in the

predicate offence. It is also contended that while the CBI

investigation is still continuing and no chargesheet has yet been filed

in the predicate offence, the DoE has proceeded in haste to file the

prosecution complaint, thereby pre-empting the investigation being

conducted by the CBI. According to the applicant, since the

declaration of the company‟s account as “fraud” already stands set

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aside, on the ground of violation of principles of natural justice, the

very foundation of the prosecution complaint stands weakened.

20. The learned senior counsel further submits that the allegation

regarding transfer of about ₹105 crore from M/s Best Foods Limited

to M/s Golden Peacock Residence Pvt. Ltd., which was allegedly

utilized for acquisition of land through M/s Raheja Developers Pvt.

Ltd., pertains to transactions undertaken in the year 2012. It is argued

that the predicate offence (RC registered by the CBI) itself relates to

the alleged period between 2015 and 2018 and, therefore, the said

amount cannot be treated as proceeds of crime arising from the

scheduled offence. It is also argued that the allegations regarding

acquisition of properties through M/s Alnair Ventures Pvt. Ltd. are

based merely on assumptions and conjectures. Even as per the case of

the DoE, the properties in question were purchased in auction

proceedings conducted by the liquidator after commencement of

insolvency proceedings against M/s Best Foods Limited. It is

contended that after initiation of Corporate Insolvency Resolution

Process and liquidation proceedings, the management and control of

the company and its bank accounts vested with the Interim

Resolution Professional and thereafter the liquidator, and therefore

there could not have been any diversion of funds from the company

by the applicant during that period.

21. It is further argued that the entire case of the DoE substantially

rests upon statements recorded under Section 50 of the PMLA of

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various persons, who have allegedly shifted the entire responsibility

upon the applicant while making exculpatory statements qua

themselves. It is argued that such statements cannot by themselves

form the sole basis either for arrest or for continued incarceration at

the stage of consideration of bail. Reliance is this regard is placed on

the decisions in Sanjay Jain v. Enforcement Directorate: (2024)

SCC Online Del 165 and Prem Prakash v. Directorate of

Enforcement: (2024) SCC Online SC 2270.

22. Lastly, it is contended that the prosecution complaint was filed

on 04.10.2025 and cognizance thereon was taken on 29.11.2025,

however the matter is still at the stage of scrutiny of documents. It is

pointed out that the predicate offence is still under investigation and

there is no likelihood of commencement of trial in the near future.

The learned senior counsel submits that the prosecution has cited 54

witnesses and relied upon voluminous documents running into about

20,000 pages. It is also submitted that as per the case of the DoE

itself, investigation qua the present applicant already stands

completed, and the applicant has remained in custody for more than

nine months. Therefore, it is prayed that the present bail application

be allowed.

SUBMISSIONS ON BEHALF OF THE RESPONDENT -DoE

23. The learned counsel appearing for the DoE opposes the present

application and submits that the applicant was the Managing Director

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and the controlling mind behind the affairs of M/s Best Foods

Limited and had played a central role in generation and laundering of

proceeds of crime arising out of fraudulent availing and diversion of

consortium bank loans. It is argued that the investigation has revealed

that the applicant had created and operated a network of shell and

dummy entities in the names of employees, relatives and associates

for the purpose of routing and layering bank funds obtained by M/s

Best Foods Limited. According to the DoE, fictitious trading

transactions, inflated stock statements, bogus receivables and

fabricated invoices were used to secure and divert loan amounts,

which were thereafter invested in real estate ventures and benami

properties. It is submitted that the applicant had diverted substantial

funds to entities namely M/s Homestead Infrastructure Development

Pvt. Ltd. and M/s Golden Peacock Residence Pvt. Ltd. and had

further concealed the money trail through cash withdrawals and

circular transactions. It is further alleged that even after

commencement of liquidation proceedings against M/s Best Foods

Limited, the applicant continued to deal with proceeds of crime by

acquiring properties of the company through front entities and proxy

purchasers.

24. The learned counsel further submits that the conduct of the

applicant throughout the investigation has been non-cooperative and

obstructive. It is argued that despite repeated summons issued under

Section 50 of the PMLA, the applicant avoided appearance on one

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pretext or the other and ultimately appeared only on 08.08.2025. It is

also submitted that during investigation, statements of witnesses

revealed that the applicant had attempted to obstruct the liquidation

and auction process of the assets of M/s Best Foods Limited by

threatening prospective bidders and by initiating frivolous litigation

through front persons and operational creditors. It is argued that after

liquidation proceedings commenced, the applicant created proxy

entities such as M/s Alnair Ventures Pvt. Ltd. and utilized associates

and relatives for reacquiring properties of M/s Best Foods Limited in

violation of the scheme of the IBC.

25. The learned counsel also contends that the allegations against

the applicant are supported by substantial oral and documentary

evidence collected during investigation. Reliance has been placed

upon the forensic audit report of M/s Haribhakti & Co. LLP, which

allegedly disclosed fictitious trading, bogus receivables, circular

transactions and diversion of funds. It is also contended that

statements recorded under Section 50 of the PMLA from employees,

associates and other persons corroborate the prosecution case that

several shell entities and bank accounts were created and operated

under the directions of the applicant for diversion and laundering of

bank funds. It is further argued that in his own statements recorded

under Section 50 of the PMLA, the applicant admitted diversion of

more than ₹200 crore through shell entities and use of employees and

relatives as dummy directors/proprietors for routing funds into

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various real estate ventures and benami acquisitions. According to the

DoE, statements of multiple employees and associates further reveal

that their documents and identities were misused for creation of

dummy entities and accounts under the instructions of the applicant

and his relatives.

26. It is further argued that investigation has revealed a clear

money trail showing generation, placement, layering and

concealment of proceeds of crime. According to the DoE, fraudulent

consortium loans amounting to about ₹1,740.30 crore constituted

proceeds of crime, out of which about ₹325.09 crore has so far been

traced at the acquisition stage through diversion to Bharat Rice Mills

and multiple shell entities floated in the names of employees and

relatives. It is submitted that thereafter substantial amounts were

layered through real estate entities including M/s Homestead

Infrastructure Development Pvt. Ltd. and M/s Golden Peacock

Residence Pvt. Ltd., while cash withdrawals of about ₹72.46 crore

were also made from dummy firms in order to obliterate the money

trail. The learned counsel also submits that the applicant subsequently

utilized front entities such as M/s Benton Residence Pvt. Ltd. and

M/s Alnair Ventures Pvt. Ltd. for reacquiring properties of M/s Best

Foods Limited during liquidation proceedings, and thus, continued to

enjoy and utilize proceeds of crime.

27. It is also argued by the learned counsel for the DoE that the

contention of the applicant regarding illegality of proceedings on

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account of absence of hearing prior to declaration of the company‟s

account as “fraud” is misconceived. It is submitted that even the

judgments relied upon by the applicant, such as CBI v. Surender

Patwa (supra), do not hold that criminal proceedings or proceedings

under the PMLA would stand vitiated on account of violation of

principles of natural justice in the process of fraud declaration by

banks. Rather, the Hon‟ble Supreme Court in CBI v. Surender Patwa

(supra) has specifically observed that such issues relating to fraud

declaration would not affect criminal proceedings arising from the

underlying allegations. It is further argued that any interim protection

or direction against coercive steps passed in the proceedings

pertaining to predicate offence cannot give any benefit to the accused

in proceedings under the PMLA, as the offence of money laundering

is a separate and independent offence. In this regard, reliance has

been placed upon the judgments of the Hon‟ble Supreme Court in Dr.

Manik Bhattacharaya v. Ramesh Malik: 2022 SCC OnLine SC 1465

and Vijay Madanlal Choudhary v. Union of India: 2022 SCC

OnLine SC 929.

28. With regard to the contention relating to existence of two

ECIRs, the learned counsel submits that there is no duplication of

proceedings inasmuch as the earlier ECIR recorded by the

Chandigarh Zonal Office was subsequently merged with the present

ECIR after approval of the Competent Authority in order to avoid

multiplicity of proceedings and overlapping investigations. It is

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submitted that thereafter, investigation was centrally conducted by

the Headquarter Investigation Unit for effective tracing of proceeds

of crime and identification of tainted assets. It is further argued that

in any event, an ECIR is merely an internal administrative document

of the DoE and is not equivalent to an FIR, as held by the Hon‟ble

Supreme Court in Vijay Madanlal Choudhary v. Union of India

(supra).

29. As regards the challenge to the legality and necessity of arrest,

the learned counsel contends that such challenge cannot be examined

in the present bail proceedings and that the grounds of arrest clearly

disclose the necessity for custodial interrogation and arrest of the

applicant. Lastly, it is argued that mere filing of the prosecution

complaint, taking of cognizance or period of custody undergone by

the applicant cannot by themselves constitute grounds for grant of

bail in absence of satisfaction of the twin conditions under Section 45

of the PMLA. Reliance has been placed upon the judgment of the

Hon‟ble Supreme Court in Union of India v. Kanhaiya Prasad: 2025

SCC OnLine SC 306 to contend that compliance with the mandatory

twin conditions remains a sine qua non for grant of bail under the

PMLA. Therefore, it is prayed that the present bail application be

dismissed.

ANALYSIS & FINDINGS

30. Before adverting to the rival contentions of the parties, this

Court notes that the present application is governed by the rigours of

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Section 45 of the PMLA. It is well settled that while considering an

application for bail under the PMLA, the Court is required to satisfy

itself that there exist reasonable grounds for believing that the

accused is not guilty of the offence alleged and that he is not likely to

commit any offence while on bail. The satisfaction contemplated

under Section 45 of the PMLA is in addition to the other

considerations governing grant of bail. It is equally settled that at the

stage of consideration of bail, a detailed appreciation of evidence or a

mini trial is neither warranted nor permissible.

31. At the same time, it is also well settled that the rigours of

Section 45 of the PMLA cannot be applied in isolation from the

constitutional guarantee of personal liberty under Article 21 of the

Constitution of India. The Hon‟ble Supreme Court has repeatedly

held that where an accused has undergone prolonged period of

incarceration and there is no likelihood of the trial concluding within

a reasonable period, the right to speedy trial becomes a relevant

consideration while deciding an application for bail, in such case, the

rigours of Section 45 of the PMLA do not operate with the same

degree of severity and must be balanced against the fundamental right

to personal liberty.

32. This Court has carefully gone through the material relied upon

by the DoE. The case of the prosecution, in brief, is that while

functioning as Managing Director of M/s Best Foods Limited, the

applicant had fraudulently availed and thereafter diverted substantial

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loan funds obtained from a consortium of banks through fictitious

trading transactions, inflated stock statements, bogus invoices and a

network of entities allegedly floated in the names of employees,

relatives and associates. The prosecution has relied upon the forensic

audit report, bank account analysis and statements recorded under

Section 50 of the PMLA to contend that the applicant was controlling

and operating such entities and that loan funds were routed through

them without any genuine underlying business transactions. This

Court also notes that the prosecution has further alleged that the

diverted funds were thereafter layered and utilized through various

entities, including real estate concerns, and substantial cash

withdrawals were also made through accounts of the alleged dummy

entities. It is further the case of the DoE that even after M/s Best

Foods Limited entered liquidation proceedings, assets of the

company were sought to be reacquired through other entities and

persons allegedly acting on behalf of the applicant. The prosecution

has, therefore, sought to establish a money trail showing generation,

diversion, concealment, possession and use of the alleged proceeds of

crime through multiple transactions and entities connected with the

applicant.

33. Be that as it may, the investigation qua the present applicant

stands concluded and the material sought to be relied upon by the

DoE has already been placed before the learned Special Court by way

of prosecution complaint. Cognizance thereof has already been taken

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by the learned Special Court vide order dated 29.11.2025 and the

matter is presently at the stage of scrutiny/supply of documents.

34. It is also a matter of record that the FIR for predicate offence

was registered by the CBI in the year 2020, and the first ECIR came

to be recorded by the DoE, Chandigarh Zonal Office, in the year

2022. Admittedly, despite registration of the said ECIR, no coercive

action was taken against the applicant for the next about three years

by DoE. Thereafter, the present ECIR came to be recorded in July,

2025 and the applicant was arrested on 08.08.2025. Thus, from the

registration of the predicate FIR in 2020 till the arrest of the applicant

in August, 2025, no steps were taken to apprehend him.

35. Most importantly, it is also not in dispute that the investigation

in the predicate offence being conducted by the CBI, since the year

2020, i.e. for about six years, has not culminated into filing of a

chargesheet till date.

36. The applicant has remained in judicial custody since

08.08.2025, and has thus undergone incarceration for almost ten

months. As noted above, the case is presently at the stage of

scrutiny/supply of documents, for the last more than five months. The

DoE has cited about 54 witnesses in the prosecution complaint and

has relied upon documents running into about 20,000 pages. Even

arguments on charge have not yet commenced and, having regard to

the volume of documentary evidence and the number of witnesses

cited by the prosecution, there appears to be no likelihood of the trial

BAIL APPLN. 4709/2025 Page 23 of 28

concluding within a reasonable period of time. Moreover, since in the

predicate offence, even the chargesheet has not been filed till date,

the fate of the present case will also largely depend on the final report

being filed in the predicate offence.

37. In this background, this Court takes note of the following

observations of the Hon‟ble Supreme Court in case of V. Senthil

Balaji v. Enforcement Directorate: 2024 SCC OnLine SC 2626:

“25. Considering the gravity of the offences in such statutes,

expeditious disposal of trials for the crimes under these statutes is

contemplated. Moreover, such statutes contain provisions laying

down higher threshold for the grant of bail. The expeditious disposal

of the trial is also warranted considering the higher threshold set for

the grant of bail. Hence, the requirement of expeditious disposal of

cases must be read into these statutes. Inordinate delay in the

conclusion of the trial and the higher threshold for the grant of bail

cannot go together. It is a well-settled principle of our criminal

jurisprudence that “bail is the rule, and jail is the exception.” These

stringent provisions regarding the grant of bail, such as Section

45(1)(iii) of the PMLA, cannot become a tool which can be used to

incarcerate the accused without trial for an unreasonably long time.

26. There are a series of decisions of this Court starting from the

decision in the case of K.A. Najeeb

2

, which hold that such stringent

provisions for the grant of bail do not take away the power of

Constitutional Courts to grant bail on the grounds of violation of Part

III of the Constitution of India. We have already referred to

paragraph 17 of the said decision, which lays down that the rigours

of such provisions will melt down where there is no likelihood of

trial being completed in a reasonable time and the period of

incarceration already undergone has exceeded a substantial part of

the prescribed sentence. One of the reasons is that if, because of such

provisions, incarceration of an undertrial accused is continued for an

unreasonably long time, the provisions may be exposed to the vice of

being violative of Article 21 of the Constitution of India.

27. Under the Statutes like PMLA, the minimum sentence is three

years, and the maximum is seven years. The minimum sentence is

higher when the scheduled offence is under the NDPS Act. When the

trial of the complaint under PMLA is likely to prolong beyond

reasonable limits, the Constitutional Courts will have to consider

BAIL APPLN. 4709/2025 Page 24 of 28

exercising their powers to grant bail. The reason is that Section

45(1)(ii) does not confer power on the State to detain an accused for

an unreasonably long time, especially when there is no possibility of

trial concluding within a reasonable time. What a reasonable time is

will depend on the provisions under which the accused is being tried

and other factors. One of the most relevant factor is the duration of

the minimum and maximum sentence for the offence. Another

important consideration is the higher threshold or stringent

conditions which a statute provides for the grant of bail. Even an

outer limit provided by the relevant law for the completion of the

trial, if any, is also a factor to be considered. The extraordinary

powers, as held in the case of K.A. Najeeb

2

, can only be exercised by

the Constitutional Courts. The Judges of the Constitutional Courts

have vast experience. Based on the facts on record, if the Judges

conclude that there is no possibility of a trial concluding in a

reasonable time, the power of granting bail can always be exercised

by the Constitutional Courts on the grounds of violation of Part III of

the Constitution of India notwithstanding the statutory provisions.

The Constitutional Courts can always exercise its jurisdiction under

Article 32 or Article 226, as the case may be. The Constitutional

Courts have to bear in mind while dealing with the cases under the

PMLA that, except in a few exceptional cases, the maximum

sentence can be of seven years. The Constitutional Courts cannot

allow provisions like Section 45(1)(ii) to become instruments in the

hands of the ED to continue incarceration for a long time when there

is no possibility of a trial of the scheduled offence and the PMLA

offence concluding within a reasonable time. If the Constitutional

Courts do not exercise their jurisdiction in such cases, the rights of

the undertrials under Article 21 of the Constitution of India will be

defeated. In a given case, if an undue delay in the disposal of the trial

of scheduled offences or disposal of trial under the PMLA can be

substantially attributed to the accused, the Constitutional Courts can

always decline to exercise jurisdiction to issue prerogative writs. An

exception will also be in a case where, considering the antecedents of

the accused, there is every possibility of the accused becoming a real

threat to society if enlarged on bail. The jurisdiction to issue

prerogative writs is always discretionary.”

38. Further, in Arvind Dham v. Enforcement Directorate: 2026

SCC OnLine SC 30, the Hon‟ble Supreme Court while granting bail

to the petitioner therein had observed as under:

“16. A two-Judge Bench of this Court in V. Senthil Balaji's case

9

has

BAIL APPLN. 4709/2025 Page 25 of 28

held that under the statutes such as PMLA, where maximum

sentence is seven years, prolonged incarceration pending trial may

warrant grant of bail by Constitutional Courts, if there is no

likelihood of the trial concluding within a reasonable time. Statutory

restrictions cannot be permitted to result in indefinite pretrial

detention in violation of Article 21.

17. A three Judge Bench of this Court in Padam Chand Jain (supra),

reiterated that prolonged incarceration cannot be allowed to convert

pretrial detention into punishment and that documentary evidence

already seized by the prosecution eliminates the possibility of

tampering with the same.

18. The right to speedy trial, enshrined under Article 21 of the

Constitution, is not eclipsed by the nature of the offence. Prolonged

incarceration of an undertrial, without commencement or reasonable

progress of trial, cannot be countenanced, as it has the effect of

converting pretrial detention into form of punishment. Economic

offences, by their very nature, may differ in degree and fact, and

therefore cannot be treated as homogeneous class warranting a

blanket denial of bail.

19. In the backdrop of aforesaid well settled parameters with regard

to exercise of jurisdiction for grant of bail in economic offences, we

now advert to the facts of the case in hand. The appellant has joined

the investigation even prior to his arrest i.e., 19.06.2024 and

02.07.2024 as well as on 09.07.2024. Thus, he has cooperated with

the investigation. Out of 28 individuals, only the appellant has been

arrested. The order dated 20.08.2025 of the Special Court records the

submission of ED that investigation qua the appellant has concluded.

The maximum sentence which can be imposed on the appellant is

seven years. The appellant is in custody for past around 16 months

and 20 days. It is pertinent to note that various Benches of this Court,

while taking into account the period of incarceration which ranges

from 3 months to 17 months in several cases have granted bail to the

appellants therein

10

. In the instant case, no cognizance has been taken

on the prosecution complaint and the proceeding is at the stage of

scrutiny of documents. No material has been placed on record to

show the fate of the application filed by the ED on 27.09.2025

seeking day-to-day hearing even after period of approximately three

months has expired. There are 210 witnesses to be examined in the

proceeding. There is no likelihood of trial commencing in the near

future. The continued incarceration in such circumstances,

particularly where the evidence which is primarily documentary in

nature, is already in custody of the prosecution, violates the right of

the appellant to speedy trial under Article 21 of the Constitution of

India.”

BAIL APPLN. 4709/2025 Page 26 of 28

39. Therefore, considering the overall facts and circumstances of

the present case, though without expressing any opinion on the merits

of the allegations levelled against the applicant, this Court is of the

opinion that the applicant has remained in judicial custody since

08.08.2025 and has undergone incarceration for about ten months;

the FIR for predicate offence was registered in the year 2020,

followed by registration of the first ECIR in the year 2022, whereas

the present ECIR came to be recorded only in the year 2025;

concededly, no coercive action was taken against the applicant

between 2020 and 2025; the investigation by the DoE qua the present

applicant stands concluded and the prosecution complaint has already

been filed; cognizance thereof was taken on 29.11.2025 and the

matter continues to remain at the stage of scrutiny/supply of

documents; the predicate offence investigation being conducted by

the CBI has not culminated into filing of a chargesheet till date; the

DoE has cited about 54 witnesses and relied upon documents running

into about 20,000 pages in the present prosecution complaint; thus,

having regard to the stage of the proceedings, the volume of

documentary evidence and the number of witnesses cited, there

appears to be no likelihood of the trial commencing and concluding

within a reasonable period of time. Therefore, balancing the right of

the applicant to personal liberty under Article 21 of the Constitution

of India with the interest of the prosecution, and considering that the

evidence sought to be relied upon by the prosecution is primarily

BAIL APPLN. 4709/2025 Page 27 of 28

documentary in nature and already stands collected, this Court is of

the view that the rigours of Section 45 of the PMLA stand

sufficiently addressed for the limited purpose of consideration of the

present bail application and that further incarceration of the applicant

is not warranted at this stage.

40. Accordingly, the present bail application is allowed and the

applicant is directed to be released on bail on his furnishing a

personal bond in the sum of ₹2,00,000/- with two sureties of the like

amount to the satisfaction of the learned Special Court/Duty Judge

concerned, on the following terms and conditions:

i) The applicant shall not leave the country without prior

permission of the learned Trial Court and shall surrender his

passport with the concerned Court;

ii) The applicant shall share his contact details (mobile

numbers and residential address) with the concerned I.O. of the

DoE as well as the Trial Court; and in case of any change in

the said details, the applicants shall promptly inform the same

to the concerned Court and the concerned I.O.;

iii) The applicant shall appear before the Trial Court on every

date of hearing unless exempted;

iv) The applicant shall make himself available for any further

investigation by the DoE, as and when required;

iv) The applicant shall not communicate with, or come into

BAIL APPLN. 4709/2025 Page 28 of 28

contact with any of the prosecution witnesses, or tamper with

the evidence of the case.

41. The present application is accordingly disposed of

42. Needless to state, nothing observed herein shall tantamount to

an expression on the merits of the case and the observations made are

only for the purpose of deciding the present bail application.

43. The judgment be uploaded on the website forthwith.

DR. SWARANA KANTA SHARMA, J

MAY 30, 2026/vc