Supreme Court Sets Aside Bail in Money Laundering Case, Slams High Court’s "Casual and Cavalier" Approach
Safiya Malik
The Supreme Court has set aside the bail granted to Kanhaiya Prasad by the Patna High Court in a money laundering case, ruling that the High Court failed to consider the mandatory requirements under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA). The Court held that the bail order was unsustainable and remanded the matter to the High Court for fresh consideration by a different bench. The respondent has been directed to surrender before the Special Court within one week.
The appeal was filed by the Union of India through the Enforcement Directorate (ED) challenging the High Court's order dated May 6, 2024, in Criminal Miscellaneous No. 17738/2024, which granted bail to Kanhaiya Prasad in connection with Special Trial (PMLA) Case No. 8 of 2023 arising from ECIR No. PTZO/14/2023.
The appellant submitted that multiple FIRs were registered in Patna, Saran, and Bhojpur districts under various sections of the Indian Penal Code and the Bihar Mineral Rules, 2019, against M/s Broad Son Commodities Private Ltd and its directors. The allegations included illegal mining and sand sales without the requisite transportation E-challan, causing a revenue loss of ₹161,15,61,164/- to the government. Since these offenses were listed as "scheduled offenses" under Section 2(1)(y) of PMLA, an ECIR was registered, and an investigation into money laundering was initiated.
During the investigation, searches were conducted under Section 17 of PMLA at various locations, including properties associated with Radha Charan Sah, the father of Kanhaiya Prasad. Statements of Kanhaiya Prasad were recorded under Section 50 of PMLA on September 1 and 4, 2023. The ED alleged that despite being summoned, the respondent failed to appear on multiple dates and was subsequently arrested on September 18, 2023. The investigation revealed that proceeds of crime amounting to ₹17,26,85,809/- were allegedly used for renovation work at a resort in Manali and for construction of a school owned by his trust.
The ED filed a Prosecution Complaint on November 10, 2023, under Section 3 read with Section 4 of PMLA, and the Special Court took cognizance on the same day. The respondent later filed for regular bail, which was granted by the High Court.
The Supreme Court held that the High Court's order was contrary to the provisions of Section 45 of PMLA, which imposes twin conditions for bail:
- The Public Prosecutor must be given an opportunity to oppose the bail application.
- The court must be satisfied that there are reasonable grounds to believe that the accused is not guilty and is unlikely to commit further offenses.
The Court observed: “There is no finding whatsoever recorded in the impugned order that there were reasonable grounds for believing that the respondent was not guilty of the alleged offense under the Act and that he was not likely to commit any offense while on bail.”
It cited previous judgments, including Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., which stated the strict requirements of Section 45. The Court noted that the offense of money laundering is not an ordinary offense but has serious financial implications, often with transnational consequences.
Rejecting the respondent’s argument that statements recorded under Section 50 of PMLA were inadmissible, the Court relied on its previous ruling in Vijay Madanlal, which held that statements made under Section 50 are not subject to the protection under Article 20(3) of the Constitution.
The Supreme Court further stated: “The High Court, in a very casual and cavalier manner, without considering the rigours of Section 45, granted bail to the respondent on absolutely extraneous and irrelevant considerations.”
The Supreme Court set aside the bail order and remanded the matter to the High Court for reconsideration by a different bench. The Court directed: “The respondent shall surrender before the Special Court within one week from today.”
It stated that it had not expressed any opinion on the merits of the case and left the bail determination to the High Court.
Case Title: Union of India v. Kanhaiya Prasad
Case Number: Criminal Appeal No. 728 of 2025 (@ Special Leave Petition (Crl.) No. 7140 of 2024)
Bench: Justice Bela M. Trivedi and Justice Prasanna B. Varale
[Read/Download order]
