Once Bail is Granted in Predicate Offence, Rigours of PMLA May Not Continue Rigidly:  Supreme Court Grants Bail in ED Case Over Paper Leak Scam

“Prosecution can seek modification if fresh incriminating material emerges” , In a significant order Supreme Court of India granted bail to Suresh Kumar, a government school headmaster accused in a question paper leak scam, setting aside the Rajasthan High Court’s earlier decision that denied him bail in a case registered by the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act, 2002 (PMLA).

A Bench comprising Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh, in Criminal Appeal arising out of SLP (Crl.) No. 4308 of 2025, held that the rigours of Section 45 of PMLA could be relaxed at the present stage since bail had already been granted in the predicate offence, and the ED’s case currently rested primarily on allegations of conspiracy.

Paper Leak Allegations and Twin FIRs

The appellant, Suresh Kumar, was arrested on 25 December 2022, after police allegedly discovered him tutoring 36 candidates on a moving bus with copies of a leaked question paper from the Senior Teacher 2nd Grade Competitive Examination. The paper in his possession matched the leaked examination paper. All 36 candidates were also in possession of the paper and were arrested.

Two FIRs were registered:

• FIR No. 227/2022 at Police Station Bekriya (Udaipur) under Sections 419, 420, 467, 468, 471, 120B IPC and the Rajasthan Public Examination (Prevention of Unfair Means in Recruitment) Act, 2022

• FIR No. 747/2022 at Police Station Sukher (Udaipur) under the same provisions

Subsequently, the ED registered ECIR/JPZO/03/2023, alleging that proceeds of crime were generated in connection with the leak and tutoring conspiracy, bringing the case under the ambit of Section 3 of the PMLA.

The appellant was arrested by the ED after securing custody from the Special Court. A supplementary prosecution complaint was filed by the ED on 28 February 2024, naming Suresh Kumar along with others.

While bail was granted to him in the predicate offence on 28 January 2025, the ED and the Special PMLA Court refused bail in the PMLA case, which was upheld by the Rajasthan High Court on 7 March 2025. The present appeal challenged that decision.

“Case Rests on Conspiracy Alone — Bail in Predicate Offence Tips the Scale”

The Supreme Court noted that while the appellant was implicated in a serious allegation involving monetary exchange for leaking examination papers, the ED's case as of now hinged solely on conspiracy, and direct proceeds of crime had not been recovered from the appellant.

The Bench observed:

“Though some close relatives of the appellant have been found to be directly involved, the ED case against the appellant as of now hinges upon the allegation of conspiracy.”

The Court further declined to delve into the evidence in detail since the investigation was still underway, but held that the bail granted in the predicate offence was a significant factor, relaxing the otherwise stringent twin conditions under Section 45 of PMLA.

Bail Allowed, But With Safeguards

Without expressing any opinion on the merits of the case, the Court granted bail, observing:

“Taking into consideration all the attenuating circumstances and without expressing any opinion on merits of the case, we are satisfied that the rigours of Section 45 of the PMLA, 2002 can be relaxed at this stage…”

The Court ordered that Suresh Kumar be released on bail to the satisfaction of the Special Judge (PMLA), subject to terms and conditions the trial court may impose.

At the same time, the Court safeguarded the ED’s prosecutorial powers, stating:

“If the ED is able to lay its hands on some more incriminating material against the appellant which prima facie establishes his direct involvement, the prosecution shall be at liberty to seek modification/recall of this order.”

The Supreme Court’s decision balances the liberty of the accused with the prosecutorial discretion of the ED, marking another instance where the Court has read down the stringency of Section 45 of PMLA in light of bail being granted in the predicate offence and absence of direct recovery of proceeds of crime.

The case underscores that bail in PMLA cases cannot be mechanically denied, particularly when the evidence is incomplete and allegations are inferential, not direct.

Date of Decision: 21 May 2025