The Delhi High Court has strongly deprecated publishing of articles on the front page of Indian Express on four consecutive days, which were not confined to reportage of the offences in connection whereof these bail applications were filed, rather those articles transgressed all permissible bounds by purporting to anticipate and answer queries which were raised by this court to the counsel for the Directorate of Enforcement.
The Court expressed anguish by stating that if the said series of articles published for four consecutive days when day to day arguments were being heard, was engineered directly or indirectly at the instance of any arm of the State, with a view to influence, overawe or subtly condition the judicial mind, the same would strike at the very roots of the Rule of Law. The spectre of proceedings being sought to be influenced through media use of such nature is not just unacceptable but deeply disquieting and must be unequivocally deprecated.
With these strong remarks against Indian Express, the High Court move on to clarify that in a PMLA bail matter, the Court must examine whether ED has prima facie established the foundational facts necessary to connect the alleged proceeds of crime with the scheduled offence and with the accused’s involvement in a process or activity relating to such proceeds. Absent that, the presumption under Sections 23/24 PMLA does not arise.
The Court held that self-incriminatory statements recorded under Section 50 PMLA while the accused is in custody of the same investigating agency are inadmissible against the maker to that extent, being hit by Section 25 of the Evidence Act for want of voluntariness; such statements cannot be relied upon as the principal basis to deny bail.
Even in PMLA cases governed by Section 45, if the material connecting the accused with proceeds of crime is hazy, if investigation leaves critical foundational links unestablished, if similarly placed persons are not arrested, and if prolonged incarceration with no imminent trial offends Article 21, the Court may conclude that there are reasonable grounds for believing the accused is not guilty for the purpose of Section 45 and grant bail, added the Court.
The High Court therefore allowed all five bail applications, and held that the material collected by ED to establish foundational facts connecting the inter se monetary transactions with the predicate offence was “completely hazy,” making it difficult at that stage to clearly identify proceeds of crime. It further held that there were reasonable grounds for believing that the applicants were not guilty, and that there was no material showing antecedents or propensities indicating they were likely to commit any offence on bail. Accordingly, each applicant was ordered to be released on bail on a personal bond of Rs. 1 lakh with one surety in the like amount, subject to not leaving India without trial court permission.
A Single Judge Bench of Justice Girish Kathpalia observed that statements of the accused recorded under Section 50 PMLA while they were in ED custody could not be treated as voluntary self-incriminatory statements. It held that where such statements are recorded while the accused is in custody, they are hit by Section 25 of the Evidence Act to the extent they are self-incriminatory and must be discarded. The Bench also noted that the statements appeared “more or less copy paste of each other” and said such statements, recorded in custody, could not be considered voluntary.
The Bench examined the WhatsApp chats relied upon by ED and observed that they were prima facie ordinary business chats among persons dealing in medicines. In the Court’s view, they could not be given such significance as to justify continued curtailment of liberty.
On foundational facts under Sections 23 and 24 PMLA, the Bench emphasised that the presumption under Sections 23/24 PMLA arises only after the prosecution establishes foundational facts: commission of scheduled offence, derivation of property from that criminal activity, and involvement of the person in activity connected with such property.
On gaps in ED investigation, the Bench made several adverse observations on the quality and completeness of ED’s investigation; that ED did not investigate the doctors/pharmacists from hospitals who allegedly supplied the empty vials or the negligence that enabled procurement of such vials; that ED largely attempted to follow the money trail without prima facie establishing the link between the allegedly tainted money and the predicate offence; that ED did not investigate end users of the allegedly spurious drugs, did not examine whether any patient had actually been administered those drugs, and did not ascertain whether any authority had received complaints of harm or ineffectiveness.
On forensic material, the Bench noted that several sampled vials connected to Neeraj Chauhan were found to contain genuine drugs, while only some vials were found spurious. As regards Pravez Khan, two Keytruda vials and one Opdivo vial were found spurious, and one Opdyta vial recovered from Viphil Jain and Suraj Shat was found spurious. Even then, the Bench held ED ought to have investigated further, including ruling out manufacturer complicity or manufacturing error.
On selective arrest, the Bench found substance in the complaint that ED had adopted selective arrest. It held that while arrest is within the IO’s prerogative, selective treatment affects fairness when liberty is curtailed. It specifically noted that several persons allegedly having graver or similar roles had not been arrested, and rejected ED’s justification that those persons cooperated and therefore were not arrested, observing that such logic would demolish the protection against self-incrimination.
On delay and Article 21, the Bench held that prolonged incarceration and lack of foreseeable trial progress were significant. It noted that ED itself said it needed at least six more months to conclude further investigation, while the applicants had already spent more than two years in custody. The Bench reiterated that Article 21 can make inroads even into the twin conditions under Section 45 PMLA, and that prolonged pre-trial detention cannot become punishment.
Briefly, the ED case arose out of an FIR registered by Delhi Police on March 12, 2024 for offences under Sections 274, 275, 276, 420, 468, 471, 120B and 34 IPC concerning manufacture and sale of spurious anti-cancer medicines. According to the prosecution case, secret information was received about a syndicate engaged in manufacture and sale of spurious medicines used in cancer treatment. A raid at Capital Greens, Moti Nagar, led to recovery of material from a flat where Viphil Jain and Suraj Shat were allegedly found filling and capping empty vials labelled as anti-cancer injections, without any drug licence or purchase records.
ED stated that during its investigation, searches under Section 17 PMLA were conducted at various premises, resulting in seizure of documents and cash totalling Rs. 70.50 lakhs, and that scrutiny of bank accounts and Section 50 statements revealed the offence. A supplementary prosecution complaint under Section 44 PMLA was filed against 16 accused persons, and cognizance was taken.
The roles ascribed by ED were that: Pravez Khan allegedly supplied empty Keytruda vials and received Rs. 2.50 lakhs in his ICICI account; Neeraj Chauhan allegedly facilitated procurement/distribution of empty vials and received proceeds through hawala-linked channels; he allegedly supplied spurious medicines to several persons including Lovee Narula and Rajesh Kumar; Suraj Shat was allegedly found during the raid filling empty vials with Fluconazole injection and Dextrose, and cash of Rs. 23 lakhs were allegedly recovered from his residence; Lovee Narula was alleged to have purchased Keytruda injections without bills, sold medicines in the market, and generated proceeds of crime of Rs. 7.45 lakhs; and Rajesh Kumar was alleged to have obtained spurious anti-cancer medicines without bills and facilitated sale in the open market.
Appearances:
Senior Advocate Madhav Khurana, along with Advocates, Rohan Wadhwa, Arun Kanwa, Amit Badsera, Sagar Suri, Mr. Vittal B., Varun Rawat, Lakshay Sahrawat, Alok Kumar, Ankit Verma, Arvind Mishra, Ved Prakash Verma, D. Kumar, Sachin Verma, Sanjeevi Seshadri, Nishant Tyagi, Arup Sinha, Saquib Mukhtar, Arham Tanvir and Shivam Srivastva, for the Petitioners
Advocates Arkaj Kumar, Aakarsh Mishra, Karsh Sarosh Rebelo and Bhavna Gandhi, for the Respondents
