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2026 Supreme(Online)(Mad) 66302
IN THE HIGH COURT OF JUDICATURE AT MADRAS
C.KUMARAPPAN, J
Nishad Ahammed Kannur – Appellant
Versus
The State Rep. by – Respondent
Crl.O.P.No.15913 of 2026
Important Points
Subject
Criminal Law - Economic Offences / Bail Jurisprudence
Act Referred
Headnote
(B) Bail - Application for - Judicial discretion - At the bail stage, court is required to assess the existence of a prima facie case - It is not for the court to conduct a trial on merits of the evidence at the initial stage, particularly when the accused has failed to cooperate with the investigative authorities. (Paras 4, 10)
Facts of the case:
The petitioner, charged with fraudulent collection of funds from hundreds of victims under the guise of an investment scheme, sought bail after being remanded to custody. The petitioner challenged the denial of bail on grounds of prolonged incarceration, non-furnishing of the grounds of arrest, and argued that the case was a simple investment dispute rather than financial laundering.
Findings of Court:
The court observed that the present case was factually distinguishable from cited precedents regarding bail and trial delays, noting that the limited number of accused made the prospect of trial completion within a reasonable timeframe plausible. The court further clarified that the legal requirement to furnish written grounds of arrest was prospective, and the petitioner's argument regarding lack of due process was time-barred.
Issues: The main issues were the applicability of the rigour for bail under the Act despite the duration of incarceration and whether procedural lapses in documenting the grounds of arrest could vitiate the detention.
Ratio Decidendi: The court held that statutory conditions for bail take precedence and cannot be bypassed solely based on the length of detention. Judicial precedents concerning procedural fairness in arrests are not retroactive, and the specific facts of a case—such as the scale of the alleged crime and the number of accused—must be evaluated to determine if the threshold for granting bail is satisfied.
Result: Criminal Original Petition dismissed.
ORDER
The petitioner, who was arrested and remanded to judicial custody on 18.09.2025 for the alleged offence under Sections 3(1) & 4 of Prevention of Money Laundering Act, 2002 in Crime No.ECIR/CEZO-II/15/2025 on the file of the respondent police, seeks bail.
2. The case of the prosecution is that the petitioner induced 825 victims to deposit a sum of Rs.4,50,000/- each with the promise of paying Rs.9,00,000/- in return, and subsequently cheated them. Based on the complaint lodged by the investors, a separate case (predicate offence) was registered by the CBCID Puducherry. Following the registration of this case, the respondent conducted an enquiry and registered an ECIR on 08.09.2025. After completing the mandatory proceedings, the petitioner was arrested on 18.09.2025 and now seeks bail.
3. The learned counsel for the petitioner would contend that the prosecution has failed to identify any proceeds of crime as defined under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as “the PMLA”). It is his further contention that the respondents have neither identified any shell entities nor established any benami arrangements or layering of funds. According to the learned counsel, the mere rotation of funds cannot, by itself, constitute the offence of money laundering under the provisions of the PMLA. He would further submit that the dispute is, at best, a simple investment dispute and that, even in the predicate offence, the petitioner was never arrested. However, under a misconception of law, the respondents arrested the petitioner on 18.09.2025 and, since then, he has been under incarceration.
3.1 It is also the contention of the learned counsel for the petitioner that the grounds of arrest were not furnished to him. He would further submit that a mere e-mail complaint was converted into an ECIR, culminating in the arrest of the petitioner, despite the fact that he had cooperated with the investigation by appearing before the respondent on four occasions. The learned counsel for the petitioner also placed reliance upon the judgment of the Hon'ble Supreme Court in V. Senthil Balaji Vs. The Deputy Director , reported in 2024 INSC 739, and would contend that the rigour under Section 45 of the PMLA cannot be invoked to deny bail, as the right to personal liberty is sacrosanct and bail is the rule and jail is an exception. Hence, he prayed to enlarge the petitioner on bail.
4. Per contra, the said contention was stoutly opposed by the learned Special Public Prosecutor and would contend that the petitioner, under the false promise of paying a monthly return of Rs.55,000/- for eleven months, collected a sum of Rs.4,50,000/- each from nearly 800 persons, thereby cheating them to the tune of about Rs.43 Crores. It is his further contention that, when the respondents commenced the investigation, the petitioner withdrew substantial amounts from various bank accounts. The learned Special Public Prosecutor would further submit that, at this stage, it is premature to go into the merits of the defence and that the Court is only required to ascertain whether there exists a prima facie case. It is also his contention that the petitioner did not cooperate with the investigation, failed to appear before the investigating agency on several occasions, and is a flight risk. Hence, he prayed for dismissal of the present bail petition.
5. I have given my anxious consideration to the submissions made on either side.
6. The main contention putfoth by the learned counsel for the petitioner is that based upon the judgment of the Hon'ble Supreme Court in V. Senthil Balaji's case (cited supra). No doubt, in the said judgment, the Hon'ble Supreme Court held that bail is the rule and jail is an exception and ultimately granted bail to the accused therein, observing that Section 45(1)(ii) of the PMLA does not confer an unfettered power upon the State to detain an accused for an unreasonably long period, particularly when there
