PFI Was Lawful Until 2018; Mere Leadership Role Alone Cannot Attract Money Laundering: Delhi HC Grants Bail In PMLA Case
Holds ED case founded on “guilt by association”; notes PFI was lawful during applicant’s tenure and SDPI remains a recognised political party
Justice Neena Bansal Krishna, Delhi High Court
The Delhi High Court has granted bail to an accused under the Prevention of Money Laundering Act, 2002 (PMLA), holding that the Enforcement Directorate’s case appeared to rest substantially on “guilt by association” rather than demonstrable involvement in laundering proceeds of crime. The Court observed that mere occupancy of leadership positions in organisations that were lawful at the relevant time cannot, without more, constitute the offence of money laundering.
The Bench noted that the applicant’s association with the Popular Front of India (PFI) spanned from 2009 to 2018, a period during which PFI was not a banned organisation. The organisation was declared unlawful only on 28-09-2022, long after the applicant had ceased association. The Court further recorded that the applicant was also a member of the Social Democratic Party of India (SDPI), which continues to function as a lawful political party and has not been declared unlawful by the Government.
Justice Neena Bansal Krishna, observed, "Thus, what emerges is that, the ED‟s entire case against the Applicant is founded on guilt by association. Mere occupancy of leadership positions in PFI, which was a lawful organization during the Applicant‟s association from 2009 to 2018. The Petitioner as Member of SDPI thus, separated much prior to PFI been declared as a banned Organization on 28.09.2022. SDPI which continues to be a lawful political party not declared unlawful by the Government, does not, without more, constitute the offence of money laundering".
"The Applicant may have at one point of time be a founding Member of PFI since 2015 and remained a member till 2018, but that or that he may be a National President of SDPI, but these allegations in itself are not enough to prima facie make out a case of laundering the proceeds of crime. Mere association of the Applicant with an organization or holding a position in an organization, without specific and concrete evidence of personal involvement in money laundering activities, cannot constitute an offence under Section 3 of PMLA", the bench further observed.
Senior Advocate Siddharth Agarwal, appeared for the petitioner and Zoheb Hossain, Special Counsel appeared for the respondent.
In the matter, the Court also took note of the fact that the applicant’s name surfaced for the first time in the 7th Supplementary Prosecution Complaint filed by the ED, despite multiple earlier complaints having been filed since 2018 without any allegation against him. The Bench further noted that no allegations had been levelled against him in the predicate offence proceedings investigated by the NIA.
While the prosecution relied upon the stringent twin conditions under Section 45 of the PMLA, the Court reiterated that constitutional courts retain the authority to grant bail where continued incarceration would infringe Article 21 of the Constitution of India. The applicant had been in custody since 03-03-2025, and charges were yet to be framed despite cognizance having been taken on the 7th Supplementary Complaint.
While placing reliance on Union of India v. K.A. Najeeb (2021) 3 SCC 713, the Court observed that statutory rigours cannot override constitutional guarantees. It held that prolonged incarceration, particularly in a case involving voluminous records and numerous witnesses with no immediate prospect of trial, cannot be justified when the foundational allegations themselves rest primarily on associative links rather than direct evidence of laundering activity.
Accordingly, the Court held that mere association with PFI during a period when it was lawful, or political engagement with SDPI, cannot ipso facto satisfy the ingredients of money laundering under the PMLA. Absent specific material demonstrating involvement in the generation, concealment, possession, or projection of proceeds of crime, criminal liability cannot be presumed solely on the basis of ideological or organisational proximity.
Cause Title: Moideen Kutty K v. Directorate Of Enforcement [Neutral Citation: 2026:DHC:1308]
Appearances:
Petitioner: Siddharth Agarwal, Senior Advocate, Raj at Bhardwaj, Ankita M Bhardwaj, Dushyant Chaudhary, Mohd. Fiyaz, Vishwajeet Singh and Siddharth Singh, Advocates.
Respondent: Zoheb Hossain, Special Counsel with Vivek Gurnani, Panel Counsel, Pranjal Tripathi, Kartik Sabharwal and Kanishk Maurya, Advocates.