Bail is the Rule, Jail Cannot Become Pre-Trial Punishment: Patna High Court Grants Bail in PMLA Case Alleging Cyber Fraud and Money Laundering

“The Twin Conditions Under Section 45 PMLA Cannot Override Article 21 – Prolonged Incarceration Without Trial Violates Right to Personal Liberty”, In a significant judgment balancing statutory rigour with constitutional liberty, the Patna High Court granted regular bail to Nitesh Kumar, an undertrial accused in a money laundering case involving foreign remittances and cyber fraud. Justice Sandeep Kumar observed that “prolonged incarceration before even being pronounced guilty of an offence should not be permitted to become a punishment without trial”, and upheld the principle that personal liberty under Article 21 of the Constitution must prevail over indefinite custody under the PMLA framework.

“Where Trial Is Not Likely to Conclude, Continued Detention Becomes a Violation of Article 21”

The case arose from an ECIR registered by the Enforcement Directorate (ED) based on information received from NCB Ireland, alleging cyber fraud against an Irish national, Ms. Carmel Fox, who was deceived into disclosing her bank details resulting in a fraudulent transfer of 950 Euros. This amount, according to ED, was layered through Indian bank accounts and shell companies, including Leconix Business Centre Pvt. Ltd., allegedly incorporated using the petitioner’s documents.

The ED claimed that the petitioner arranged multiple fake bank accounts, facilitated the layering of proceeds of crime, and admitted to his involvement during questioning under Section 50 of the PMLA. It was also alleged that the petitioner provided documents used to establish shell companies and assisted other co-accused in laundering foreign funds, with transactions running into lakhs of rupees.

However, the petitioner’s case before the Court was that he had no direct role in the fraud, and that his personal documents were misused by the co-accused. His counsel argued that the petitioner was a young, unemployed man, whose identity had been impersonated to open bank accounts and companies. He had been in custody since 20 December 2023, and no money had been recovered from him.

Referring to the statements of independent witnesses recorded under Section 50, the Court noted that co-accused had impersonated the petitioner and applied for renting commercial space using his identity, raising serious doubt over his active involvement.

The Court held that “allegations such as these, involving impersonation, misuse of documents, and operation of shell companies, raise complex questions of fact and law which are to be appreciated during trial and not at the stage of bail.”

“Stringent Bail Provisions Under PMLA Cannot Be Used as a Tool to Perpetuate Custodial Punishment Without Trial”

Justice Sandeep Kumar observed that the rigours of Section 45 of the PMLA, which imposes twin conditions for bail, must be interpreted in light of constitutional protections under Article 21. Relying on a catena of recent decisions including V. Senthil Balaji v. ED, Manish Sisodia v. ED, and Prem Prakash v. Union of India, the Court held:

“The stringent statutory provisions under Section 45 of the PMLA have to be harmonized with the right to personal liberty enshrined under Article 21 of the Constitution.”

The Court further clarified that the twin conditions under PMLA do not create an absolute bar against bail, especially in cases of “prolonged incarceration and where trial is unlikely to be concluded in reasonable time.” Referring to Manish Sisodia v. ED, the Court noted:

“Bail is not to be withheld as punishment... detention before conviction should not become punishment without trial.”

Highlighting that the trial in the present case involved 31 witnesses and over 6,125 pages of documents, the Court held that there was no realistic prospect of early conclusion of proceedings, and therefore, the continued custody of the petitioner would amount to “a direct affront to his fundamental right to life and liberty.”

“Where Co-Accused Have Been Granted Bail, Parity Must Prevail”

Justice Kumar also relied on the principle of parity, pointing out that similarly placed co-accused had already been granted bail by coordinate benches. The Court referred to the Supreme Court’s decision in Sagar v. State of U.P., affirming that “when the role of the co-accused is similar, and the allegations are nearly identical, denial of bail to one would be unjustified.”

The Court thus held that: “The petitioner deserves to be enlarged on bail not only because of his prolonged incarceration, but also on the ground of parity with co-accused, absence of recovery from his possession, and the complex nature of allegations, which will require detailed scrutiny during trial.”

“Statutory Limitations Must Yield to Constitutional Guarantees When Liberty is at Stake”

While granting bail, the Court imposed strict conditions to ensure the petitioner’s continued cooperation with the investigation and availability during trial. The conditions included restrictions on foreign travel, prohibition on tampering with evidence, and a requirement to keep his mobile number active and inform the ED of any change in residence.

In doing so, Justice Sandeep Kumar reaffirmed the constitutional principle that “liberty is the rule and detention the exception”, stating that:

“Statutory bar under bail provisions cannot be construed as an instrument for indefinite incarceration. When the trial is unlikely to conclude, keeping the accused behind bars would render the protections under Article 21 illusory.”

The Court added: “The Constitution does not permit a situation where imprisonment precedes trial by years. The burden of proving guilt lies with the prosecution, not the accused’s burden to suffer until such proof emerges.”

Ultimately, the Court allowed the bail application and clarified: “This Court has not expressed any opinion on the merits of the case. The findings are only for the purpose of adjudication of bail.”

Date of Decision: 16 January 2026