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Union of India v. Kanhaiya Prasad

Criminal Appeal · 2025 INSC 210Decided 13 Feb 2025
Crl.A. No.-000728-000728 - 2025 (@ Special Leave Petition (Crl.) No. 7140 of 2024)
Justice Bela M. Trivedi · Justice Prasanna B. Varale

Background

The Enforcement Directorate (ED) alleged that the respondent, son of an accused involved in a large-scale illegal sand-mining and hawala racket in Bihar, helped launder over Rs.17 crore in proceeds of crime by using it to renovate a resort, fund a family trust's school construction, and route money through family-owned firms. After his arrest and the filing of a formal prosecution complaint under the PMLA, the Patna High Court granted him bail. The ED challenged that bail order before the Supreme Court, arguing the High Court ignored the mandatory twin conditions for bail under Section 45 of the PMLA.

Decision Breakdown

The Supreme Court held that Section 45 of the PMLA mandates two conditions before bail can be granted in serious money-laundering cases: the prosecutor must get a chance to oppose the bail application, and the court must be satisfied there are reasonable grounds to believe the accused is not guilty and unlikely to reoffend on bail. Relying on the three-judge bench ruling in Vijay Madanlal Choudhary v. Union of India, the Court held these conditions are mandatory and non-negotiable, and found that the High Court had granted bail in a "casual and cavalier manner" without recording any such finding. The Court also rejected the argument that statements recorded under Section 50 of the PMLA are inadmissible for violating the right against self-incrimination, again following Vijay Madanlal. It set aside the bail order, directed the case be reconsidered by a different bench of the High Court, and ordered the respondent to surrender within a week.

Lesson Learnt

In serious economic offences like money laundering, courts cannot grant bail as a matter of routine: Section 45 of the PMLA requires a reasoned finding that the accused is likely innocent and unlikely to reoffend, and skipping that analysis will get a bail order overturned regardless of how the accused later behaved.

Official source (sci.gov.in)View Judgment (PDF)

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