The Delhi High Court observed that, once a person is charged with the offence of money laundering, the law presumes that the proceeds of crime are involved in money laundering unless the contrary is proven by the accused.

The Court observed thus in an Application filed by an accused seeking bail in a case registered under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA) by the Enforcement Directorate (ED).

A Single Bench of Justice Chandra Dhari Singh said, “From the bare perusal of Section 24 of the PMLA, it is evident that once a person is charged with the offence of money laundering under Section 3, the law presumes that the proceeds of crime are involved in money laundering unless the contrary is proven by the accused. … In the present case, the investigating agency has relied not only on the statement of co-accused under Section 50 of the PMLA but also on financial records, WhatsApp communications, and transactional data, which indicate the applicant's active role in the alleged money laundering activities.”

The Bench further clarified that once the ED has demonstrated the foundational facts, the onus shifts to the accused to rebut the presumption that the proceeds of crime were not involved in money laundering.

Senior Advocate Siddharth Aggarwal appeared for the Petitioner/Accused while Advocate (Special Counsel) Manish Jain appeared for the Respondent/ED.

Brief Facts

An FIR was registered under Sections 274, 275, 276, 420, 468, 471, read with 120B and 34 of the Indian Penal Code (IPC) based on a Complaint. The said Complaint alleged the involvement of several accused persons in the procurement, manufacturing, and sale of spurious anti-cancer medicines. It was alleged that the primary accused persons in collusion with their several associates were engaged in the illegal procurement of empty vials and raw materials of anti-cancer drugs such as Keytruda and Opdyta. These counterfeit drugs were allegedly manufactured and distributed in the market to unsuspecting cancer patients. Resultantly, the Police conducted raids and the accused persons were allegedly caught in the act of filling empty vials with unauthorised substances and packaging them using specialised machinery.

The police seized a substantial quantity of raw materials, counterfeit vials, packaging equipment, etc. Based on the FIR, the ED (Respondent) initiated the proceedings under PMLA and the Petitioner-accused was initially included as a witness in the investigation. However, thereafter, he was named as Accused No. 9 under the allegations of money laundering. It was alleged that the Petitioner was operating a pharmacy in Muzaffarpur, Bihar by the name and style of ‘M/s Popular Medicine’ and was also involved in selling of medicines on online e-commerce platforms such as ‘India Mart’. Hence, he was arrested and then he sought bail before the Special Judge but his Application was rejected. Being aggrieved, he was before the High Court.

Reasoning

The High Court after hearing the contentions of the counsel, reiterated, “It is well settled that proceedings under the PMLA and the predicate offence registered under the IPC or other statutes are distinct in nature, scope, and purpose. The offence of money laundering under Section 3 of the PMLA is an independent offence that focuses on the process of disguising the illicit origin of funds and their integration into the financial system.”

The Court noted that the grant of bail in the predicate offence does not automatically entitle the accused to bail under PMLA proceedings and unlike general offences under the IPC, the PMLA imposes stringent twin conditions under Section 45, which require the accused to demonstrate that he is not guilty of money laundering and that he is unlikely to commit any offence while on bail.

“The distinction is further reinforced by the fact that the burden of proof under Section 24 of the PMLA shifts onto the accused, which is a significant departure from the principles applicable in predicate offences under the CrPC. … Therefore, the mere fact that the applicant was granted bail in the predicate offence does not, ipso facto, justify the grant of bail in the present proceedings under PMLA”, it added.

The Court further observed that by virtue of Section 24 of the PMLA, the ED is not required to conclusively establish the accused's guilt at the pre-trial stage, rather, the accused must demonstrate that the proceeds of crime attributed to him are not linked to money laundering and in the absence of any rebuttal by the accused, the presumption under Section 24 of the PMLA stands in favour of the ED, thereby justifying his continued detention.

“Applying the legal presumption under Section 24(a) of the PMLA, once the respondent has demonstrated these foundational facts, the onus shifts to the applicant to rebut the presumption that the proceeds of crime were not involved in money laundering. The applicant, however, has failed to provide any credible evidence to rebut this presumption. Mere denial of involvement or assertion of being an investor in the firm without day-to-day operational control is insufficient to discharge the burden imposed by the statute”, it also noted.

The Court clarified that the presumption under Section 24(a) of the PMLA does not operate conclusively and allows the accused an opportunity to rebut the same through cross examination, production of evidence, or explanations under Section 313 of the CrPC and in the absence of any such rebuttal, the presumption stands in favour of the ED, and the accused’s continued detention is justified under the PMLA.

“… it is held that the applicant has been unable to put forth any propositions before this Court that are sufficient for grant of bail and thus, the same are rejected. In view of the same, this Court is not inclined to release the applicant on bail and the instant application, is, hereby, dismissed along with the pending applications, if any”, it concluded.

Accordingly, the High Court refused to grant bail to the accused.

Cause Title- Aditya Krishna v. Directorate of Enforcement (Neutral Citation: 2025:DHC:462)

Appearance:

Petitioner: Senior Advocate Siddharth Aggarwal, Advocates Tanya Agarwal, and Gaurav Kalra.

Respondent: Special Counsel Manish Jain, Advocates Snehal Sharda, Gulnaz Khan, and Dhanvati.

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