Jharkhand HC Rejects Bail in ₹750-Crore Fake ITC & PMLA Case Citing Failure to Meet S. 45 Twin Conditions [Read Order]

The Jharkhand High Court has rejected a bail plea in a prosecution relating to alleged circulation of fake Goods and Services Tax invoices and laundering of proceeds of crime, holding that the statutory twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002 were not met in view of the scale and seriousness of the alleged economic offences.

The petitioner, Mohit Deora, sought bail in a case registered by the Enforcement Directorate based on three complaint cases under Section 132 of the Central Goods and Services Tax Act, 2017 and offences under the Indian Penal Code, 1860. The investigation alleged that around 135 shell companies were floated across multiple States to generate and pass on fraudulent Input Tax Credit without actual supply of goods or services.

The Enforcement Directorate stated that the petitioner received ₹42 lakh from Tirumala Enterprises, ₹1.81 crore from Poojasli Enterprises (OPC) Private Limited, and approximately ₹1.4 crore from entities linked to his father, along with substantial cash deposits and unexplained credits in his bank accounts.

The petitioner, represented by Indrajit Sinha and Rishav Kumar, argued that he had been falsely implicated, was not named in the predicate offences, and had no role in creation or operation of the alleged shell companies. It was contended that the statutory requirements for arrest under the Prevention of Money Laundering Act, 2002 had not been complied with and that he should be released on bail.

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The Enforcement Directorate, represented by Amit Kumar Das, Saurav Kumar, Varun Girdhar and Manmohit Bhalla, submitted that the petitioner was lawfully arrested with written reasons to believe and that the grounds of arrest were served upon him. It was argued that more than ₹10.31 crore of proceeds of crime had been routed through the petitioner’s accounts, that the deposits were disproportionate to his declared income, and that he had continued receiving such funds even after prior arrests in the case.

The Bench of Justice Sujit Narayan Prasad held that the documentary material, including bank statements and traced transfers from firms involved in fake Input Tax Credit transactions, indicated prima facie involvement of the petitioner in the offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002.

The Court found that the arrest procedure under Section 19 had been complied with, the petitioner’s explanation for large credits was not supported by evidence, and the magnitude of the transactions did not permit a finding that he was not guilty.

Considering the gravity of the allegations, the scale of the alleged fraud, and the mandatory twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002, the Court held that the petitioner had not established reasonable grounds for believing that he was not guilty, nor had he demonstrated that he was unlikely to commit an offence while on bail.

The High Court dismissed the bail plea.