Delhi HC Denies Bail to Accused of Terror-Funding and Money Laundering Case: Cites Prima Facie Material Under PMLA [Read Order]

The case arose from an alleged wide-ranging conspiracy involving Pakistani handlers, hawala networks, and separatist elements in Jammu & Kashmir to de-stabilise India through illicit funds routed from abroad.

The case was registered on the basis of a First Information Report (FIR) dated 30.05.2017, naming several accused, including Hafiz Saeed, Yasin Malik, Masarat Alam, Asiya Andrabi, and Shabir Shah. According to the prosecution, Shah played a key role in receiving and distributing funds from Pakistan to fuel unrest in Kashmir through stone-pelting, school burnings, and other violent acts.

The NIA alleged that Shah received large sums of money through hawala channels and that the proceeds of crime were used to fund unlawful activities. A key piece of evidence relied upon was a protected witness statement claiming that Shah had received ₹1.10 crore through hawala operatives, purportedly on the instructions of Pakistan-based actors. The supplementary charge sheet filed by the NIA in 2019 also pointed to Shah’s links with Zahoor Ahmad Shah Watali, another accused in the case, who allegedly facilitated foreign remittances for various separatist leaders.

GST READY RECKONER: Complete Topic wise Circulars, Instructions & Guidelines Click here

Counsel appearing for Shah, contended that the material relied upon by the prosecution was vague, outdated, and inadmissible. He argued that several pieces of evidence, including video speeches and witness statements, had been recycled from old FIRs dating back to the 1990s and early 2000s, and had not resulted in any conviction.

It was submitted that Shah has cumulatively spent over 36 years in custody in various cases and that no direct evidence of money laundering under PMLA had been presented. The defence also questioned the credibility of protected witnesses and claimed that the financial records lacked proper forensic backing. A plea was also raised for consideration of house arrest on health and humanitarian grounds, citing Shah’s advanced age and prolonged incarceration.

Counsel representing the NIA, argued that the evidence gathered, including call detail records, protected witness statements, and financial trails, clearly linked Shah to the receipt and disbursal of illicit funds. It was submitted that the funds were part of a larger terror ecosystem supported by entities in Pakistan, and that Shah’s role as the head of the Jammu & Kashmir Democratic Freedom Party (JKDFP) was not just political but operational.

The prosecution contended that Shah’s involvement fell squarely within the definitions of "proceeds of crime" under Section 2(1)(u) of the PMLA and "terrorist financing" under UAPA. As such, the twin conditions under Section 45 of the PMLA and Section 43D(5) of UAPA for grant of bail were not satisfied.

A Division Bench comprising Justice Navin Chawla and Justice Shalinder Kaur passed the order held that the evidence placed on record by the NIA constituted reasonable grounds to believe that the accusations were prima facie true.

The Court clarified that while a detailed examination of admissibility would occur at trial, the threshold under the PMLA for denying bail had been met. Further, the Court found no merit in the claim for house arrest, noting the gravity of the charges and the possibility of interference with the ongoing trial.

Complete Ready to Use PDFs of 200+ Agreements Click here

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates