Introduction
In the evolving jurisprudence surrounding economic offences, courts are often required to balance individual liberty against the imperatives of effective financial crime investigation. This tension was recently brought into focus by the Delhi High Court in Bhaskar Yadav & Anr. v. Directorate of Enforcement1, a decision that examined the contours of anticipatory bail under the Prevention of Money Laundering Act, 2002. Arising from allegations of large-scale cyber fraud and laundering of proceeds of crime through layered banking channels and digital platforms, the case foregrounds a critical legal principle repeatedly emphasised by courts: the stage of bail is not a stage for rendering a verdict on guilt or innocence.
This approach stands on a distinct factual footing from the Supreme Court’s decision in Arvind Dham v. Directorate of Enforcement2, where the Court weighed the rigours of Section 45 against prolonged incarceration and delay in trial. In Bhaskar Yadav, the High Court was not confronted with issues of extended custody or trial stagnation, but with an ongoing investigation involving alleged destruction of evidence and the asserted necessity of custodial interrogation. The comparison underscores that the interplay between Article 213 and the twin conditions under Section 454 is inherently fact-sensitive and must be applied on a case-by-case basis, rather than as a uniform dilution of statutory rigour.
To understand this conflict, one must turn to the statutory bail framework under the PMLA, which departs from ordinary criminal law. While Article 21 and the BNSS emphasise personal liberty, Section 45 of the PMLA imposes the “twin conditions”, requiring the court to assess, on broad probabilities, whether the accused is prima facie not guilty and unlikely to reoffend. By seeking anticipatory bail, the applicants effectively invited a deeper scrutiny of the material at a pre-arrest stage, which the Court declined, reiterating that such proceedings cannot be converted into a mini-trial and must remain confined to the statutory threshold.
Rigour of Section 45 PMLA and the Twin Conditions
The Court reaffirmed that Section 45 of the Prevention of Money Laundering Act, 2002 exclusively governs both bail and anticipatory bail in money laundering cases. The provision, beginning with a non-obstante clause, overrides the BNSS and mandates satisfaction of the twin conditions: (i) reasonable grounds to believe that the accused is not guilty of the offence of money laundering, and (ii) that the accused is not likely to commit any offence while on bail.
Relying on Assistant Director, Enforcement Directorate v. Dr. V.C. Mohan5, the Court held that once an offence under PMLA is invoked, the rigours of Section 45 are automatically attracted even at the anticipatory bail stage, the Court reiterated that while considering anticipatory bail, it is not required to conduct a detailed evaluation of evidence or return findings on guilt or innocence. Drawing from Vijay Madanlal Choudhary v. Union of India6, the Court observed that money laundering is a distinct and aggravated offence with transnational impact, justifying stringent procedural standards. At the bail stage, the inquiry is confined to whether there exists a genuine case based on reasonable material, which denotes a threshold higher than mere prima facie satisfaction but lower than proof beyond reasonable doubt.
The Court rejected the contention that judicial precedents dilute Section 45 due to Article 21 concerns. It clarified that the line of cases where prolonged incarceration overrides the twin conditions applies only to regular bail after arrest, and cannot be stretched to anticipatory bail. Such an interpretation, the Court held, would completely undermine the investigative framework of PMLA.In this context, the Court emphasised that custodial interrogation remains a legitimate and effective investigative tool, especially in complex economic offences, and cannot be negated at the pre-arrest stage.
Economic Offences as a Distinct Class
Placing reliance on State of Bihar v. Amit Kumar7 and Y.S. Jagan Mohan Reddy v. CBI8, the Court reiterated that economic offences constitute a class apart and require a different approach in bail matters. Such offences involve deep-rooted conspiracies, large-scale public harm, and serious threats to the financial health of the country, thereby justifying stricter scrutiny. This position was further reinforced by references to Rohit Tandon v. ED, Nimmagadda Prasad v. CBI9, and SFIO v. Nitin Johari10, which collectively establish that the principle of “bail is the rule” operates with significant restraint in cases involving socio-economic crimes.
Applying the above principles, the Court rejected the attempt to trivialise the case as mere cryptocurrency trading. The material on record revealed a multi-layered and cross-border laundering mechanism, involving fictitious entities, mule accounts, digital wallets, and large-scale movement of proceeds of crime. The accused, being skilled professionals, were found to occupy significant positions within the laundering structure. The Court accepted the Enforcement Directorate’s submission that custodial interrogation was essential to uncover further layers of laundering, identify institutional involvement, and prevent destruction of evidence. Reliance was placed on landmark case of P. Chidambaram v. Directorate of Enforcement11, which recognises that grant of anticipatory bail may, in appropriate cases, hamper effective investigation.
Conclusion
The decision in Bhaskar Yadav & Anr. v. Directorate of Enforcement reinforces the strict statutory framework governing bail under the PMLA. By applying the twin conditions of Section 45 to anticipatory bail, the Delhi High Court reiterated that pre-arrest proceedings cannot be used to assess guilt or conduct a detailed evaluation of evidence. The judgment affirms that custodial interrogation remains a legitimate investigative tool in complex money laundering cases, particularly where layered transactions and allegations of evidence destruction are involved.
The ruling also clarifies that any relaxation of Section 45 on Article 21 grounds is necessarily fact-specific. Unlike cases involving prolonged incarceration or trial delay, the present matter arose at an early stage of an expanding investigation. The decision thus underscores that the balance between personal liberty and statutory rigour under the PMLA must be struck on a case-by-case basis, without diluting the legislative mandate.
Citations
Expositor(s): Adv. Archana Shukla, Riya Raksha (Intern), Aditi Singh (Intern)
