Custody Alone Cannot Unlock PMLA Bail When Section 45 PMLA Threshold Remains Unsatisfied: Punjab and Haryana High Court Denies Relief in Alleged ₹236-Crore Money-Laundering Case
Case Name: Sandeep Gupta v. Directorate of Enforcement
Date of Judgment: 27 August 2026
Citation: CRM-M-22257-2026
Bench: Hon’ble Mr. Justice Sumeet Goel
Held: The Punjab and Haryana High Court held that incarceration of approximately seven months, by itself, did not entitle an accused to regular bail under the Prevention of Money Laundering Act, 2002, particularly when the prosecution material prima facie attributed a direct and active role to him in the generation, diversion and laundering of proceeds of crime amounting to approximately ₹236 crore. At the existing stage of the proceedings, when material prosecution witnesses were yet to be examined, the Court found no tangible basis for recording the satisfaction required under Section 45 PMLA that there were reasonable grounds for believing that the petitioner was not guilty of the alleged offence. The regular bail petition was consequently dismissed at that stage.
Summary: The petitioner, Sandeep Gupta, sought regular bail in proceedings arising from ECIR/GNZO/03/2021 registered by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002. The ECIR originated from a scheduled offence registered by the Central Bureau of Investigation concerning allegations of criminal conspiracy, cheating, forgery and diversion of bank funds involving M/s Richa Industries Limited.
According to the Enforcement Directorate, Richa Industries Limited had availed substantial financial facilities from banks and its accounts were subsequently classified as fraudulent. The alleged fraud generated proceeds of crime amounting to approximately ₹236 crore. The prosecution alleged that the company’s funds, assets and valuable business opportunities were systematically diverted through connected and shell entities by employing fabricated or manipulated accounts, accommodation entries, corporate guarantees and related-party transactions. These transactions were allegedly structured to divert funds from Richa Industries Limited, layer them through different entities and ultimately project the tainted funds as legitimate money.
The Directorate of Enforcement alleged that Saariga Constructions Private Limited, Subhash Gupta & Sons Private Limited, Riyana Infratech Private Limited and Richa Krishna Constructions Private Limited were used in the diversion, possession, layering and utilisation of the alleged proceeds of crime. The petitioner, who was the former Managing Director of Richa Industries Limited and an accused in the scheduled offence, was alleged to have exercised effective control over the financial and operational affairs of the company and its connected entities.
In relation to Saariga Constructions Private Limited, the prosecution alleged that the petitioner acted as its de facto controlling authority despite not being formally designated as a director. The Enforcement Directorate relied upon witness statements, financial records and WhatsApp communications to allege that he directed and guided the company’s financial affairs. It was further alleged that the petitioner continued exercising influence over important projects during the Corporate Insolvency Resolution Process of Richa Industries Limited and participated in diverting projects, funds and business value away from the corporate debtor.
The petitioner contended that he had remained in custody since 20 January 2026, the prosecution complaint had already been filed on 19 March 2026, and the investigation concerning him stood completed. It was argued that the prosecution case was based predominantly upon documentary and digital evidence already in the Enforcement Directorate’s possession, leaving no reasonable possibility of tampering. The petitioner further relied upon the likely delay in trial, pointing out that the scheduled offence involved 1,245 documents running into more than 28,000 pages and 187 prosecution witnesses. He invoked his fundamental right to a speedy trial under Article 21 of the Constitution and submitted that he was neither in custody in the predicate offence nor a flight risk.
The Enforcement Directorate opposed bail on the ground that the case involved an organised and sophisticated scheme of diversion and layering of bank funds through manipulated accounts, shell entities, accommodation entries and corporate transactions. It maintained that the evidence disclosed the petitioner’s active involvement in the generation, diversion, possession and utilisation of proceeds of crime and that he had failed to satisfy the statutory requirements governing bail under Section 45 PMLA.
The High Court observed that the determination of regular bail requires a contextual assessment of the nature and gravity of the allegations, the accused’s specific role, the quality of the prosecution material, the likelihood of absconding or tampering with evidence, the stage of trial, the period of custody and the probability of the proceedings concluding within a reasonable time. In economic offences, these considerations acquire particular significance because such offences may involve calculated planning, sophisticated financial arrangements, manipulation of records, layering of funds and coordinated use of corporate structures.
The Court clarified that the absence of physical violence does not diminish the seriousness of an economic offence. Where identifiable transactions, financial trails, digital communications, corporate records and witness statements prima facie disclose a specific and direct role of the accused, the prayer for bail must be considered with greater circumspection. Although the Court cannot conduct a meticulous evaluation of evidence at the bail stage, it cannot disregard material having substantial prima facie probative value.
On examining the record, the High Court found that the allegations against the petitioner were direct and specific. The material cited by the prosecution, including witness statements, WhatsApp communications, the petitioner’s alleged control over Richa Industries Limited and its group concerns, and his alleged involvement during the insolvency proceedings, prima facie indicated an active role in the alleged laundering operation.
The Court noted that the prosecution complaint cited 25 witnesses and that the material witnesses were yet to be examined. Their evidence was considered significant for determining the petitioner’s alleged role. At that stage, the Court found no tangible basis for concluding that there were reasonable grounds to believe that the petitioner was not guilty of the alleged offence, as required for bail under Section 45 PMLA.
The petitioner’s custody of approximately seven months was held insufficient, by itself, to justify his release. Considering the gravity and magnitude of the allegations, the specific role attributed to him and the existing stage of the proceedings, the period of incarceration had not become so prolonged as to warrant bail solely on the ground of delay.
Decision: The Punjab and Haryana High Court dismissed the regular bail petition as being devoid of merit at that stage.