Failure to Justify Custodial Interrogation Undermines ED's Case: Delhi HC Grants Anticipatory Bail in PMLA Matter [Read Order]

The High Court while delivering the verdict, criticized the ED's approach of relying heavily on "loose sheets" and third-party statements without satisfying the statutory threshold under Section 19 of the PMLA. The court held that repeated summons and long-pending investigations, without decisive action or tangible evidence, could not justify denial of anticipatory bail in perpetuity.

The case arose from a large-scale illegal coal mining and transportation scam in Eastern Coalfield Limited’s (ECL) leasehold area. In 2020, a First Information Report (FIR) was registered by the CBI alleging criminal conspiracy, corruption, and theft under various provisions of the IPC and Prevention of Corruption Act. Subsequently, the ED initiated parallel proceedings under the PMLA based on the predicate offence.

Majee, a former director of Mark Enclave Pvt. Ltd (MEPL), was accused of orchestrating coal theft and channeling proceeds through a network of shell companies. Properties were provisionally attached, and multiple rounds of investigation followed, culminating in a prosecution complaint and supplementary filings.

Majee’s counsel, submitted that his client had appeared before the ED on 13 occasions, furnished documents, and responded to all summons, either in person or through written representations, despite medical and personal emergencies. He emphasized that the ED had not once attempted to arrest Majee over the last five years of investigation and had already filed chargesheets without seeking custodial interrogation.

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More importantly, the defense argued that the documents relied upon by the ED, specifically private ledgers and handwritten notes recovered from the accountant were not books of accounts under the Evidence Act and were inadmissible as sole evidence of guilt. Citing the Supreme Court’s rulings in Common Cause,and Pankaj Bansal, the counsel underscored that admissible evidence was a prerequisite for forming the “reason to believe” mandated under Section 19(1) of the PMLA before any arrest.

The Special Public Prosecutor for the ED countered that Majee was the kingpin of an illegal coal syndicate involving misappropriation of coal worth over ₹2,700 crore. He pointed out that dummy directors and shell companies were deployed to launder illicit proceeds, as confirmed by the statements of multiple individuals, including the directors themselves. It was argued that despite multiple summons, Majee had evaded appearances post-2021, and custodial interrogation was necessary to uncover deeper financial links and trace the flow of proceeds.

The ED also invoked Section 45’s twin conditions, claiming Majee had not met the burden of proving he was neither guilty nor a flight risk. The High Court, was not persuaded by the ED’s submission. It was held that the ED had issued over 11 summons across several years without once arresting the applicant. The court observed that the agency had already filed a prosecution complaint and two supplementary chargesheets, implying the investigation was materially complete. It was held that Majee had not violated any interim protections or bail conditions previously granted by the Special Judge or the Supreme Court in connected proceedings.

On the twin conditions under Section 45 of the PMLA, the Court held that the ED failed to demonstrate any compelling evidence suggesting guilt or risk of re-offending. The reliance on inadmissible materials, such as unverified ledgers and untested third-party statements, did not satisfy the statutory threshold. The court observed that arrest cannot be used as a coercive tool for fishing expeditions when the agency has failed to act for years, the Court observed that prolonged liberty without misuse weakens the State’s argument for pre-trial custody.

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While granting anticipatory bail, the Court imposed several conditions on the applicant. He was asked to pay a personal bond of ₹2 lakh and two sureties. Furthermore he was asked surrender his passport. He was also asked to cooperate with the ED during investigation and appearance on summons. The applicant was also asked not to tamper with evidence or influencing witnesses. The Court also clarified that any breach would entitle the ED to seek cancellation of bail.

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