Participation In Later Dealings Is Money Laundering Only If Assets Are Proceeds Of Crime: Delhi High Court Grants Bail To Former RCOM Executive Director In PMLA Case
The Court granted bail to Punit Garg in ED’s Reliance Communications case; noted that Section 45 twin conditions are met and that prolonged custody, with a trial unlikely to end soon, supports release.
Justice Sanjeev Narula, Delhi High Court
The Delhi High Court has held that a person’s participation in later transactions concerning an asset amounts to money laundering only if the asset is proceeds of crime. It said refinancing earlier borrowings through later loans does not, by itself, answer whether assets bought years earlier derive from a scheduled offence.
Applying this, the Court granted regular bail to Punit Narendra Garg, a former Executive Director of Reliance Communications Limited (RCOM), in the Enforcement Directorate’s (ED) money-laundering case. It found reasonable grounds to believe he was not guilty at this stage, and that he was unlikely to offend on bail. It also relied on his custody of over eight months and the sharp expansion of the prosecution, which made an early trial unlikely.
A Bench of Justice Sanjeev Narula observed, “…The communications relied upon by ED do indicate his participation in the subsequent transactions, but such participation would constitute money laundering only if the assets or funds concerned were proceeds of crime. It is this essential connection which, on the material presently available, has not been sufficiently established. These circumstances, assessed on the broad probabilities applicable at the stage of bail, provide reasonable grounds for believing that the Applicant is not guilty of the offence alleged. This finding is confined to the requirements of Section 45 and does not determine the legality of the underlying transactions or the Applicant’s eventual culpability, which remain matters for trial”.
Senior Advocates Arvind Nigam, Pavan Narang appeared for the petitioner and Senior Advocate Zoheb Hossain appeared for the respondent.
“…repayment trail is relevant and may also bear upon the alleged improper utilisation of the later credit facilities. The further inference that the assets acquired in 2008 and 2010 thereby became proceeds of the scheduled offences requires examination of the criminal activity from which those assets were derived and cannot be ipso facto assessed. Refinancing, by itself, does not answer that enquiry. On the material presently placed before the Court, the requisite connection between the earlier acquisitions and the alleged scheduled offences remains a substantial disputed question”, the Bench said.
The case arises from CBI and ED proceedings over alleged loan diversion by RCOM, resulting in a ₹2,929.05 crore loss to SBI. The scheduled offences span 2013–2017. The ED identified three transactions involving the applicant, a 2008 yacht, a 2010 Manhattan apartment, and educational payments for his daughters, attributing about ₹149.77 crore as proceeds of crime. The ED argued that subsequent loans were used to repay earlier borrowings that funded these assets. The applicant contended that the assets predated the offences, he only became Executive Director in October 2017, and the education payments were approved employment benefits.
Arrested in January 2026, the applicant sought bail under Section 483 of the BNSS and Section 45 of the PMLA after the Special Judge denied relief in June 2026 and a bulky supplementary complaint was filed in August 2026.
The Court noted that Section 45 twin conditions must be satisfied on broad probabilities and framed two core questions: the character of the assets and the applicant's involvement. Placing reliance on Pavana Dibbur v. Directorate of Enforcement, the Court observed that the assets were acquired years before the scheduled offences. While the repayment trail required a trial, the link between the 2008–2010 acquisitions and the 2013–2017 offences remained a substantial disputed question. Citing Anoop Bartaria, the Court emphasized that while Section 3 does not require knowledge of tainted origin, the property must still constitute proceeds of crime.
Treating the applicant's communications as showing participation in later dealings rather than resolving the asset's origin, the Court excluded his custodial statements under Prem Prakash and noted the NCLT order did not exonerate him. Finding that the absence of his name from the predicate FIRs and the non-arrest of others weighed in his favour, the Court held there were reasonable grounds to believe he was not guilty for the purposes of bail.
On custody, the Court noted a consolidated record of about 77,384 pages and 56 witnesses. Placing reliance on V. Senthil Balaji, Mahesh Joshi and Arvind Dham, it held that Section 45 cannot justify indefinite pre-trial detention where trial is unlikely to conclude within a reasonable time. It held that ED’s concerns about witnesses and evidence could be met through conditions, and that Supreme Court directions for time-bound investigation did not govern his detention.
The applicant was released on a personal bond of Rs. 1,00,000 with two sureties, to the Special Judge’s satisfaction. The conditions require him to surrender his passport and not leave India without permission, and to give his contact details to the Investigating Officer.
Cause Title: Punit Narendra Garg v. Directorate of Enforcement (Neutral Citation: 2026:DHC:9285)
Appearances:
Petitioner: Arvind Nigam, Pavan Narang, Senior Advocates, VP Singh, Priyank Ladoia, Arjun Narang, Kushagra Jain, Puneet Dhanoa and Jitesh Lakra for the petitioner.
Respondent: Zoheb Hossain, Senior Advocate, Vivek Gurnani, Panel Counsel, Pranjal Tripathi and Shyam Bhageria, Kota Shastri, I.O., for ED, Advocates.