Bail granted in cancer drug case under PMLA as there was no clear link between proceeds of crime & predicate offence

Conclusion: Bail was granted in a spurious cancer drug case under Prevention of Money Laundering Act (PMLA) as there was no clear link between the alleged proceeds of crime and the main offence and ED did not check important things like role of doctors, hospitals or end users.

Held: The prosecution case of the Directorate of Enforcement (ED) was that the accused persons were involved in procuring empty vials of expensive cancer medicines, refilling them with counterfeit substances, and selling them in the market, thereby generating proceeds of crime. The ED relied substantially upon statements recorded under Section 50 PMLA, alleged WhatsApp chats, bank transactions and recoveries to oppose bail, contending that the accused knowingly participated in a grave economic offence affecting public health. It was further argued that the proceeds of crime collectively exceeded the statutory threshold and that the seriousness of the allegations disentitled the applicants from bail. The accused persons contended that they had already been granted bail in the predicate offences or, in some cases, were not even chargesheeted therein; that the ED had failed to establish foundational facts connecting the alleged monetary transactions with actual proceeds of crime; and that the statements recorded under Section 50 PMLA while the accused were in custody were inadmissible in view of the principles laid down by the Supreme Court in Prem Prakash v. Union of India and Vijay Madanlal Choudhary v. Union of India. It was further argued that the investigation suffered from selective arrests, absence of inquiry regarding the actual end users of the medicines, failure to establish whether the drugs were genuinely counterfeit, and prolonged incarceration exceeding two years without likelihood of early conclusion of trial. Allowing the bail applications, the High Court held that the ED had failed, at the stage of consideration of bail, to establish the foundational facts necessary for invoking the statutory presumption under Sections 23 and 24 PMLA. The Court held that statements recorded under Section 50 PMLA from persons already in custody could not prima facie be treated as voluntary and self-incriminatory statements admissible against the makers. The Court further observed that the WhatsApp chats relied upon by the ED merely reflected ordinary business communications and did not establish money laundering. Emphasising that prolonged incarceration without foreseeable conclusion of trial would violate the constitutional guarantee under Article 21, the Court held that there existed reasonable grounds for believing that the accused were not guilty of the offence under PMLA and that there was no material showing likelihood of their committing offences while on bail. Accordingly, all applicants were directed to be released on bail subject to conditions.