Delhi High Court Slams ED’s ‘Manifestly Arbitrary’ Arrest Policy in Money Laundering Case

New Delhi – In a significant ruling that scrutinizes the investigative discretion of the Enforcement Directorate (ED), the Delhi High Court has granted bail to three individuals in a high-value money laundering case, while pointedly criticizing the agency's selective approach to arrests as "manifestly arbitrary." The decision underscores the judiciary's role in upholding the principles of parity and fairness, even in cases prosecuted under the stringent Prevention of Money Laundering Act (PMLA).

Justice Amit Mahajan, while granting relief to Vipin Yadav, Ajay, and Rakesh Karwa, highlighted a glaring inconsistency in the ED's actions: the non-arrest of the alleged main accused, Rohit Aggarwal, who purportedly played a more significant role in the scheme.

“Having not arrested an accused who appears to have a graver role than the applicants and not even arraigned a person named to have facilitated in arranging the mule accounts, the approach adopted by the respondent department prima facie appears to be manifestly arbitrary and the benefit of parity cannot be denied to the applicants,” Justice Mahajan observed in the order.

The judgment arrives amidst a broader legal discourse on the powers of investigative agencies and the fundamental rights of the accused, adding a crucial judicial voice to the debate on procedural fairness in economic offense cases.

The Allegations: A Rs. 641 Crore Cyber Fraud Web

The case originates from a CBI probe into a massive cyber fraud scheme that allegedly duped Indian citizens of Rs. 641 crores through fake investment opportunities, sham job offers, and similar fraudulent activities. The investigation identified 937 bank accounts used in the scheme, with 12 of them being directly managed and controlled by a syndicate that included the applicants.

The ED’s prosecution complaint alleged that Ajay and Vipin Yadav, operating from New Delhi, created a complex web of entities to manage and control financial transactions, specifically focusing on uploading illicit funds onto a digital wallet platform named Pyypl. The agency claimed these individuals received funds from the main accused, Rohit Aggarwal, and others, including the third applicant, Rakesh Karwa.

The applicants vehemently denied the charges, arguing they were falsely implicated and had no part in generating the proceeds of crime. Their counsel asserted that the ED's case was built almost entirely on the statement of co-accused Rohit Aggarwal, and contended that the agency cannot be permitted to "cherry-pick" whom to arrest, especially when the alleged primary beneficiaries and kingpins remain at liberty.

Parity as a Cornerstone of Justice

The central pillar of the applicants' bail plea, which the High Court found persuasive, was the doctrine of parity. The defense argued that while the applicants were arrested and incarcerated, Rohit Aggarwal—whom the ED itself described as central to the collection of the proceeds of crime—was not taken into custody.

The ED countered this by stating that Aggarwal had extended full cooperation during the investigation, voluntarily disclosing bank accounts, cryptocurrency wallets, and the modus operandi of the laundering operation. In contrast, the agency accused the applicants of being evasive and defiant. It was alleged that Ajay evaded queries, Vipin concealed crypto dealings, and Rakesh Karwa fled during a search, destroyed digital evidence, and ignored summonses.

However, the Court was not convinced that this distinction justified the disparity in treatment. Justice Mahajan meticulously analyzed the alleged roles of each individual, concluding that the applicants were positioned at lower rungs of the criminal enterprise than Aggarwal.

“Prima facie, applicants Ajay and Vipin were at the penultimate rung of the transaction while the accused Rohit (main accused) was alleged to be privy to the collection of proceeds of crime by the organised crime syndicate,” the Court noted, establishing a clear hierarchy of culpability.

For applicant Rakesh Karwa, the Court found his role to be, at best, similar to that of Aggarwal, as he was alleged to have transferred funds and cryptocurrency to various entities, including Aggarwal. This finding made the ED’s decision to arrest Karwa while leaving Aggarwal unarrested even more conspicuous. The court found this differential treatment to be a compelling reason to grant bail, ensuring that the applicants were not subjected to harsher conditions than an accused with a graver or similar role.

Delayed Trials and the Right to Liberty

Beyond the issue of parity, the High Court also grounded its decision in the constitutional guarantee of a speedy trial. The Court took judicial notice of the protracted nature of complex PMLA trials and the substantial burden it places on the liberty of undertrials.

Justice Mahajan observed that the investigation into the predicate offence was still incomplete, and the case was only at the stage of cognizance. The applicants Ajay and Vipin had been arrested in November 2024, and Rakesh in January 2025, yet the trial was nowhere near commencement.

“It is not just the period spent in incarceration but also the possibility of delayed trial that is to be seen by the Court,” the judgment emphasized.

With 76 witnesses cited in the first prosecution complaint and another 35 in the supplementary one, the Court concluded that an expeditious trial was highly unlikely. This prolonged pre-trial detention, coupled with the "manifestly arbitrary" investigative approach, tipped the scales of justice in favor of granting bail. The Court also noted that the applicants had no prior criminal involvements and were unlikely to commit any offence while on bail, satisfying other conventional bail conditions.

Wider Implications for PMLA Jurisprudence

This judgment is poised to have a significant impact on how bail applications are argued and decided in PMLA cases. It reinforces that while the PMLA contains stringent conditions for bail, these do not operate in a vacuum and must be harmonized with fundamental constitutional principles of equality, fairness, and liberty.

Legal experts suggest that this ruling provides a robust precedent for defense counsels to challenge the investigative practices of the ED, particularly in cases involving multiple accused with varying degrees of alleged involvement. The Court's willingness to label the ED's selective arrest strategy as "manifestly arbitrary" empowers the judiciary to look beyond the agency’s claims of non-cooperation and assess whether the differential treatment of accused individuals is justified and reasonable.

As the justice system continues to grapple with the balance between the state's power to prosecute economic offenses and the individual's right to liberty, the Delhi High Court's decision in VIPIN YADAV v. DIRECTORATE OF ENFORCEMENT serves as a critical reminder that the process of justice must itself be just. It champions the principle that no individual should be made to suffer prolonged incarceration due to investigative inconsistencies and the inevitability of a delayed trial.