Kanhaiya Prasad Vs Union of India through (Patna High Court)
Predicate FIRs quashed or stalled – Section 45 PMLA Rigours balanced with Article 21 – Bail allowed by Patna HC
Background
The petitioner, Kanhaiya Prasad, sought regular bail in Special Trial (PMLA) Case No. 08/2023 arising from ECIR/PTZO/14/2023. Enforcement Directorate (ED) alleged that his father, Radha Charan Sah, and others, through M/s Broadson Commodities Pvt. Ltd., engaged in illegal sand mining and sale, causing a loss of ₹161 crore+ to the government. ED alleged that the petitioner assisted in laundering proceeds of crime by investing in properties, LLPs, and renovating family-owned institutions.
Petitioner’s Arguments
- He was not named in any of the 20 predicate FIRs; only 7 remain pending and charge-sheets have not been filed in most.
- His father already got bail, upheld by the Supreme Court.
- Income and investments (including ₹2.5 crore in Ganinath Ventures LLP) were disclosed before the Income Tax Department as lawful business income; taxes were paid.
- Documents relied upon were recovered from a rented premises occupied by another director, not him.
- No nexus shown between him and Broadson Commodities’ alleged illegal operations; ED’s case rests on uncorroborated statements of co-accused.
- He has spent about 15 months in custody, trial not likely to conclude soon, and co-accused are already on bail.
- Relied on Supreme Court rulings (Prem Prakash, Manish Sisodia, Ramkripal Meena, V. Senthil Balaji) stressing that bail under PMLA must balance Section 45 rigours with Article 21 rights.
ED’s Arguments
- Even if not named in predicate FIRs, he can be liable under Section 3 PMLA for assisting concealment of proceeds (Vijay Madanlal Choudhary, Pavana Dibbur).
- Alleged to have routed ₹8.93 crore + ₹11.9 crore + ₹5.36 crore for acquiring/renovating Manali Resort and constructing MSD World School, all with proceeds of crime.
- WhatsApp chats, staff statements, & bank counterfoils show petitioner handled transactions through hawala & layering.
- He ignored ED summons, showing non-cooperation.
- The case involves ₹210+ crore proceeds of crime (2017-2021 period).
- If granted bail, he may hamper trial and influence witnesses; Section 45 twin conditions are strict.
Court’s Findings
- The charge sheet contains no direct evidence linking petitioner to laundering; allegations are largely based on co-accused statements and conjectures.
- No documentary trail proves his involvement in concealing or laundering crime proceeds.
- Income disclosures were accepted by the Income Tax Department before ED’s prosecution complaint, showing independent lawful earnings.
- Predicate FIRs are either quashed or stagnant, weakening the ED’s foundation.
- Petitioner already spent 15 months in custody, charges not framed, and trial will be prolonged (56 witnesses, 4000+ pages of documents).
- Evidence is mainly documentary and already seized, so no risk of tampering.
- Applying Supreme Court’s rulings (Vijay Madanlal, Manish Sisodia, K.A. Najeeb), the Court reiterated that “Bail is the rule, jail is the exception”, even under PMLA.
High Court’s Decision
- The Court held there were no reasonable grounds to believe petitioner was involved in laundering.
- Petitioner satisfied Section 45 twin conditions.
- Bail granted with stringent conditions – Bail bond of ₹10,00,000 with two sureties, Surrender passport; not leave country, Provide working mobile number to ED, Regular attendance in trial, no witness contact, no adjournment misuse & No criminal activity during bail.
Final Order
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