Mere Receipt of Proceeds Does Not Amount to Financing Drug Trade: Himachal Pradesh High Court Grants Bail in NDPS Case Involving Joint Account with Father

“Financing must involve active, operational support to illicit drug trade—mere deposit of proceeds in joint bank account by co-accused does not attract Section 27A of the NDPS Act” — Himachal High Court

Himachal Pradesh High Court granted regular bail to a woman accused under Sections 21, 27A, and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). The Court ruled that mere receipt of funds deposited by her father in a joint bank account, without any direct evidence of her intentional involvement in drug trafficking or operational support, does not amount to “financing” or “abetment” under the NDPS Act.

“Prima facie, the deposit of ₹49.78 lakhs in the petitioner’s joint account by her father does not attract the provisions of Section 27A of the NDPS Act. She cannot be held to have financed or abetted the illicit drug trade simply by receiving proceeds without active complicity,” the Court observed.

No Recovery, No Incriminating Act, No Mens Rea: High Court Dissects ‘Financing’ and ‘Abetment’ under NDPS Act

“To constitute ‘financing’ under Section 27A, there must be conscious and purposeful monetary assistance to sustain the illegal trade”

The petitioner, Shabnam, was arrested following disclosures made by co-accused including her father, Lakhwinder Singh, in a high-profile heroin trafficking case involving a seizure of 262 grams of heroin. The prosecution’s case was that ₹49,78,845, allegedly proceeds of drug transactions, were deposited in a joint bank account operated by Shabnam and her father, alongside the purchase of insurance and fixed deposit investments in her name.

However, the Court rejected the prosecution's invocation of Section 27A (which punishes financing illicit traffic) and Section 29 (which penalises abetment or criminal conspiracy), noting:

“There is no recovery from the petitioner. Her only alleged ‘involvement’ is being a joint account holder with her father. No evidence of active participation, operational knowledge, or intent has been placed on record.”

Citing Rhea Chakraborty v. Union of India, 2021 CrLJ 248 (Bom), the Court adopted a purposive interpretation of "financing":

“Simply providing money for a particular transaction does not amount to financing. ‘Financing’ means providing funds to sustain or operate an illicit drug trade. Passive receipt of deposits does not satisfy that threshold.” [Para 10–11]

No Case of Abetment: “Receipt of Proceeds Without Intent to Aid or Instigate Is Not Abetment”

“Abetment under Section 29 requires active complicity—mere benefit from crime does not constitute the crime”

The prosecution also argued that Shabnam abetted drug trafficking under Section 29 by allowing her account to be used. The Court firmly rejected this contention, relying on the settled interpretation of “abetment”:

“The receipt of the money from the drug trade does not prima facie amount to aiding of the drug trade... Petitioner’s case will not fall within the definition of abetment.” [Para 13]

Quoting from Lalitbhai Vikramchand Parekh v. State of Gujarat, MANU/GJ/0165/2015, and summarising English and Indian jurisprudence, the Court clarified:

“To abet, there must be instigation, active cooperation, or intentional aid. Presence, silence, or passive conduct—even if beneficial—does not constitute abetment unless it is shown to have been done with mens rea.”

The Court observed that no overt act or instigation was attributed to the petitioner, nor was there evidence that she knew the origin or purpose of the funds.

Liberty Cannot Be Denied Without Reasonable Grounds

Justice Kainthla extensively referred to Supreme Court precedents, especially Pinki v. State of U.P., (2025) 7 SCC 314 and Prahlad Singh Bhati v. State (NCT of Delhi), (2001) 4 SCC 280, on the principles governing bail under serious charges.

“An order for bail bereft of cogent reasoning cannot be sustained... Liberty of an individual is an invaluable right. At the same time, while considering bail, courts cannot lose sight of the serious nature of accusations,” the Court acknowledged. [Paras 8–9]

However, based on the record, the Court found that the accusations against the petitioner were not supported by prima facie material justifying continued detention under Sections 27A and 29.

“There is no reasonable ground to believe that the petitioner has committed an offence punishable under Section 27-A or abetted the possession of commercial quantity of heroin. Hence, she cannot be detained in custody for an indefinite period.” [Para 14]

Bail Granted with Stringent Conditions to Prevent Abuse

The Court allowed the petition and directed the petitioner’s release on bail upon furnishing a personal bond of ₹1,00,000 with one surety. It imposed the following strict conditions:

• The petitioner shall not intimidate or influence witnesses

• She must attend trial regularly and not seek unnecessary adjournments

• She must disclose change of address or any travel exceeding 7 days to the trial court and police

• The petitioner shall surrender her passport, and share her mobile number and social media handles

• Any change in phone number or social media must be reported within five days

The Court also warned:

“In case of violation of any of these conditions, the prosecution will have the right to file a petition for cancellation of the bail.” [Para 16]

“Liberty Must Be Balanced with Law—But Without Direct Evidence, Custody Becomes Punitive”

Summing up its reasoning, the Court stressed that continued incarceration without proof of guilt or active involvement violates the principle of proportionality and fair trial.

“Observations made hereinabove are regarding the disposal of this petition and will have no bearing whatsoever on the case’s merits.”

The decision reinforces that Section 27A of the NDPS Act cannot be invoked casually and that courts must ensure that mere association or familial linkage is not equated with criminal complicity.

Date of Decision: 16 October 2025