The Manipur High Court has granted bail to the Managing Director of the Lamjingba Group in connection with an alleged ₹600 crore Ponzi scheme being investigated by the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act, 2002 (PMLA). The Court held that prolonged incarceration coupled with delay in the investigation and trial of predicate offences justified grant of bail, notwithstanding the stringent “twin conditions” under Section 45 of the PMLA.
The ED case stems from allegations that the Lamjingba Group operated an unauthorised deposit and lending scheme in Manipur, collecting funds from nearly 15,000 investors by promising exorbitant returns, without being registered as a Non-Banking Financial Company under the RBI Act. It was alleged that public deposits were mobilised largely in cash, initial returns were paid to gain investor confidence, and the scheme collapsed in early 2020, causing losses estimated at around ₹600 crore.
According to the prosecution, the accused transferred substantial assets of the group to an investors’ association through a purported MoU in order to disguise the proceeds of crime, attracting offences under Sections 3 and 4 of the PMLA. Several movable and immovable properties were provisionally attached, and trial under the PMLA was stated to be underway before the Special Court, with only a few witnesses examined so far.
The High Court noted that multiple FIRs forming the scheduled/predicate offences had been registered by the state police; however, investigations in those cases remained incomplete and charge-sheets had not been filed within the statutory period. The accused had already been released on default bail in all the predicate offences. Despite this, he continued to remain in custody solely in the PMLA case, having spent nearly three years as an undertrial.
Relying on Supreme Court rulings including Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1, V. Senthil Balaji v. Directorate of Enforcement, and Manish Sisodia v. Enforcement Directorate, 2024 INSC 739, the Court held that prolonged pre-trial detention cannot be allowed to become punitive. It reiterated that the existence of a scheduled offence is a sine qua non for sustaining proceedings under the PMLA and that where trials are unlikely to conclude within a reasonable time, the rigour of Section 45 must yield to constitutional guarantees under Article 21.
The Court further observed that even if the PMLA trial were to conclude, no conviction could be recorded unless the accused is convicted in the scheduled offences. In such circumstances, continued incarceration till the maximum sentence under the PMLA would be unjust and disproportionate.
Accordingly, the Manipur High Court allowed the bail application, directing the release of the accused on stringent conditions, including furnishing of a substantial bail bond and sureties, regular appearance before the trial court and the ED, surrender of passport, and restrictions on travel and witness interaction. The Court clarified that any breach of the conditions would entitle the ED to seek cancellation of bail.
Appearances:
For the Applicant : Mr. Nageswar Rao, Sr. Adv. with Mr. M. Brojendro, Advocate.
For the Respondents : Mr. S. Suresh, Advocate.
