Calcutta HC Denies Bail to Prayag Group Directors in ₹2,862 Crore PMLA Fraud Case

Introduction

In a significant ruling on economic offences, the Calcutta High Court has rejected the regular bail applications of Basudeb Bagchi and Avik Bagchi, the principal directors of the Prayag Group of companies, in a money laundering case involving the alleged defrauding of thousands of investors to the tune of over ₹2,862 crore. The division bench comprising Justice Rajarshi Bharadwaj and Justice Uday Kumar emphasized the gravity of the offence under the Prevention of Money Laundering Act, 2002 (PMLA), the petitioners' status as proclaimed offenders, and the presence of massive untraced proceeds of crime as key factors disentitling them from bail. This decision, delivered on January 15, 2026, in CRM (M) 932 of 2025, underscores the stringent application of PMLA's twin conditions for bail under Section 45, particularly in cases of large-scale financial fraud. The ruling comes amid ongoing scrutiny of white-collar crimes in India, where investor protection and the recovery of siphoned funds remain paramount concerns for enforcement agencies like the Enforcement Directorate (ED).

The case arises from allegations that the Prayag Group operated deceptive investment schemes disguised as time-share, real estate, and gold-based opportunities, luring investors with promises of high returns. While the group claims to have refunded ₹1,140 crore, the ED points to an untraced deficit of ₹1,906 crore, layered through shell entities. This judgment not only reinforces the judiciary's firm stance on economic offences but also aligns with recent trends in Calcutta High Court jurisprudence, including directives on speedy trials in complex financial cases.

Case Background

The Prayag Group, founded and led by Basudeb Bagchi and his son Avik Bagchi, emerged as a major player in eastern India's investment landscape, particularly in West Bengal and Jharkhand. The group promoted various schemes that attracted small-scale investors, including retirees and middle-class families, promising secure returns through property shares and gold investments. However, investigations revealed these to be facades for a Ponzi-like operation, where funds from new investors were used to pay returns to earlier ones, leading to a collapse that wiped out life savings of thousands.

The roots of the current prosecution trace back to 2014, when the Central Bureau of Investigation (CBI) registered FIR RC.35/S/2014 against the Prayag Group for cheating and criminal breach of trust. This led to the first Enforcement Case Information Report (ECIR/RNSZO/01/2016) by the ED under PMLA, focusing on proceeds generated up to 2016. Despite this ongoing probe, the ED alleges that the Bagchis continued generating fresh illicit funds post-2016, prompting a new ECIR/KLZO-I/15/2024 (ML Case No. 10 of 2024). The petitioners were declared proclaimed offenders after evading non-bailable warrants, and they were arrested in 2025, remaining in custody for over eight months at the time of the bail hearing.

The legal dispute centers on whether the current PMLA proceedings violate the double jeopardy bar under Article 20(2) of the Constitution, given the overlap with the 2016 ECIR. Key questions include: Does the generation of new proceeds of crime constitute a distinct offence? Can the petitioners satisfy the twin conditions under Section 45 of PMLA—reasonable grounds to believe they are not guilty and that they won't commit further offences—considering their proclaimed offender status? The timeline reflects prolonged delays typical in PMLA cases: the CBI FIR is nearly a decade old, with the trial involving a 3,500-page charge sheet and 29 witnesses, highlighting concerns over pre-trial detention.

In parallel, the Calcutta High Court had appointed a One-Man Committee in 2015 (MAT No. 559 of 2015) to oversee asset management and refunds, which has facilitated partial restitution. However, the ED's focus on post-2016 layering through shell companies and untraced funds has kept the pressure on the directors. This case is part of a broader wave of financial scam probes in the region, reminiscent of the Saradha chit fund scandal, which triggered market panic and contributed to Prayag's downfall, though the group maintains it was a legitimate business affected by external factors.

Arguments Presented

The petitioners, represented by Ms. Misha Rohatgi Mohta along with other counsel, mounted a multi-pronged attack on the proceedings' maintainability and the denial of liberty. Central to their contention was Article 20(2)'s protection against double jeopardy, arguing that the current ECIR is a "mirror copy" of the 2016 investigation, both stemming from the same CBI FIR. They asserted that prosecuting the same predicate offence twice violates constitutional safeguards, drawing on principles that no person shall be prosecuted and punished for the same offence more than once.

Emphasizing personal liberty under Article 21, counsel highlighted the petitioners' eight-month incarceration as "pre-trial punishment," especially given the trial's indefinite delay due to the voluminous evidence. Citing Manish Sisodia v. Directorate of Enforcement (2024 INSC 595), they urged harmonizing PMLA's Section 45 with the right to a speedy trial, noting that prolonged detention without trial conclusion undermines justice. In Arvind Kejriwal v. Directorate of Enforcement (2024 INSC 512), they pointed to the need for strict compliance with arrest procedures under Sections 41 and 41A of the CrPC (now BNSS), arguing the arrests were punitive rather than investigative necessities.

Further, invoking V. Senthil Balaji v. Deputy Director (2024 INSC 739), they submitted that with no immediate trial prospect, continued custody is unjust. To demonstrate bona fides, they noted the group's legitimate operations, the impact of the Saradha scam-induced panic, and refunds of ₹1,140 crore under court supervision. For Basudeb Bagchi, a 68-year-old with Type-II diabetes and hypertension, they invoked the first proviso to Section 45(1) PMLA for discretionary release on health grounds. In Tarsem Lal v. ED (2024) 7 SCC 61, they argued the lack of initial arrest in the Ranchi probe showed the current one as circumvention.

Opposing the bail, the ED, through Mr. Arijit Chakrabarti and team, countered that the current ECIR targets distinct, fresh proceeds of crime generated post-2016, making it a continuing offence under Section 3 PMLA, not hit by double jeopardy. They stressed that Article 20(2) applies only post-conviction or acquittal of the prior trial, which remains pending. The petitioners' evasion of process, leading to proclaimed offender status, failed the "tripod test" of flight risk, evidence tampering, and witness influence, distinguishing from P. Chidambaram v. Directorate of Enforcement (2019) 9 SCC 24.

The ED underscored the unfulfilled twin conditions of Section 45, with ₹1,906 crore untraced, asserting no reasonable grounds to believe the petitioners are not guilty. Labeling economic offences as a "class apart" per Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439, they argued the gravity—defrauding public savings—demands custodial interrogation to trace layered funds and prevent further harm. Counsel dismissed health pleas, noting adequate medical facilities in custody, and rejected bona fides given the ongoing layering through shells despite the prior probe.

Legal Analysis

The Calcutta High Court meticulously dissected the arguments, affirming that the PMLA prosecution's rigors serve the paramount goal of combating money laundering that erodes economic integrity. On double jeopardy, the bench clarified that Article 20(2) is not triggered absent a concluded prior trial with conviction or acquittal. Drawing from Vijay Madanlal Choudhary v. Union of India (2022) 10 SCC 1, it held money laundering as a "continuing offence"—a dynamic process persisting with involvement in proceeds of crime—thus, post-2016 activities form a fresh cause of action. This distinguishes static crimes from ongoing financial concealment, shielding neither past nor future illegality.

The core of the ruling pivots on Section 45's twin conditions, deemed statutory imperatives overriding general CrPC provisions, as in Gautam Kundu v. Enforcement Directorate (2015) 16 SCC 1. The court found no satisfaction of innocence given the ₹1,906 crore deficit and evidence of fresh layering, echoing P. Chidambaram (supra) on the magnitude's demand for stringent scrutiny in public fund siphoning cases. Economic offences were viewed as a "class apart," per Y.S. Jagan Mohan Reddy (supra), involving deep conspiracies affecting national economy, reiterated in Tarun Kumar v. Assistant Director, ED (2023) SCC OnLine SC 1486. The bench stressed that such crimes warrant a different judicial lens to deter white-collar disdain for law.

The proclaimed offender status fatally undermined the bail plea, failing the tripod test from Deepak Yadav v. State of UP (2022) 8 SCC 559 and recent cases like Manish Sisodia and V. Senthil Balaji . Unlike those, the Bagchis lacked clean antecedents and evaded warrants, posing risks. The court distinguished Arvind Kejriwal on procedural lapses absent here and rejected health-based release under Section 45's proviso as non-automatic, given flight risks and available custody medical care.

Precedents were applied to balance Article 21 liberty with societal interests: Manish Sisodia and V. Senthil Balaji were deemed inapplicable due to the fraud's scale, prioritizing investor restitution over individual freedom. The ruling integrates PMLA's object—to confiscate tainted property—with constitutional rights, ensuring bail isn't a license for evasion.

Recent Calcutta High Court developments, such as the swearing-in of Chief Justice Sujoy Paul on January 16, 2026, who vowed to uphold institutional purity, contextualize this as part of a push for efficient justice in financial matters. Similarly, the court's eviction ruling in Ratan Karmakar v. Smt. Chaina Das (SA/60/2004) affirming landlord autonomy parallels the emphasis here on not undermining legitimate claims (like ED's recovery) through technicalities.

Key Observations

The judgment is replete with incisive observations underscoring judicial philosophy on economic crimes:

• On the continuing nature of PMLA offences: "As elucidated in Vijay Madanlal Choudhary v. Union of India (2022), the offense of money laundering under Section 3 of the PMLA is not a frozen event but a persistent process. It continues as long as the accused is involved in any activity connected with the 'Proceeds of Crime.'"

• Regarding double jeopardy: "Article 20(2) is a shield for the innocent; it is not a license for prospective criminality nor does it provide an umbrella of immunity for subsequent illegalities committed during the pendency of a prior investigation."

• On economic offences' gravity: "It is a settled principle that economic offenses involving public money constitute a 'class apart.' As held in Y.S. Jagan Mohan Reddy, that 'The economic offences having deep-rooted conspiracies and involving loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole.'"

• Addressing proclaimed offender status: "While sensitive to Article 21, we note that the petitioners’ status as 'Proclaimed Offenders' deals a decisive blow to their prayer. An accused who ignores judicial warrants disentitles themselves from equitable consideration."

• Balancing liberty and public interest: "The liberty of an individual cannot be viewed in isolation from the collective interests of thousands of defrauded investors."

These excerpts highlight the court's nuanced approach, prioritizing systemic integrity over personal pleas.

Court's Decision

The division bench unequivocally dismissed the bail petitions, holding: "In light of the foregoing discussions and having found no merit in the contentions raised by the petitioners, we are of the firm opinion that this is not a fit case for the grant of regular bail. Accordingly, the prayer for bail is rejected." The petitioners must remain in custody, with their conduct and the offence's scale creating an insurmountable barrier.

Practically, this mandates continued ED investigation into fund trails, potentially aiding recovery for victims. The court issued directives to expedite the trial: the trial court must proceed day-to-day, and the ED to ensure witness production without adjournments, safeguarding speedy trial rights under Article 21. No costs were imposed.

Implications are profound for PMLA jurisprudence: it entrenches the twin conditions' rigor in high-value frauds, discouraging bail as routine and reinforcing proclaimed offender consequences. Future cases may cite this to deny liberty where evasion or untraced proceeds persist, impacting white-collar defendants. For investors, it signals robust enforcement, potentially deterring similar schemes. In the broader context of India's financial regulatory landscape, alongside SEBI's involvement, this bolsters confidence in mechanisms like One-Man Committees for restitution.

This ruling, amid Calcutta High Court's recent affirmations of autonomy in landlord rights and quashing overreach in election duties (e.g., Bikash Rath v. Election Commission , WPA No. 27006 of 2025), portrays a judiciary vigilant against abuse while upholding procedural fairness. As economic crimes evolve with digital layering, such precedents will guide stricter accountability, ensuring public funds' sanctity without eroding constitutional liberties.