HP High Court Grants Bail, Cites Insufficient Evidence for Drug Financing and Organised Crime Charges

Shimla , HP - The Himachal Pradesh High Court, in a significant ruling, granted regular bail to four individuals accused in a drug trafficking case, emphasizing that statements by co-accused and financial transactions, without further corroboration linking them directly to the drug trade, are insufficient to prima facie establish offences of financing illicit drug traffic under Section 27A of the NDPS Act or engagement in organised crime under Section 111 of the Bharatiya Nyaya Sanhita (BNS). Hon’ble Mr. Justice RakeshKainthla delivered the common judgment on May 15, 2025, in the bail petitions filed by Mukul Chauhan , Sandeep Dhiman, Akshit Verma @ Akshu, and Rajat Kreik.

Case Background: Allegations and Arrests

The petitioners were implicated in FIR No. 107 of 2024, registered at Police Station Sadar, Shimla , for offences under Sections 21, 27A, and 29 of the Narcotic Drugs and Psychotropic Substances (NDPS) Act and Section 111(2) of the BNS. Their arrests stemmed from disclosure statements made by co-accused persons, financial transactions with an alleged kingpin Sandeep Shah , and call detail records. Notably, no contraband was recovered directly from the petitioners. The case originated from a police raid on Hotel Himachal on August 14, 2024, where 6.380 grams of heroin were recovered from two individuals, Suraj and Rohit Pandey . Their interrogation led investigators to Sandeep Shah , and subsequently, through financial trails and other disclosures, to the current petitioners.

Arguments Presented

Petitioners' Stance: Led by Mr. Ajay Kochhar, Senior Advocate for Mukul Chauhan , and other counsels for the remaining petitioners, the defense argued: * The petitioners were falsely implicated based on inadmissible co-accused statements and uncorroborated financial transactions. * No recovery was made from them, and the 6.038 grams of heroin involved was an "intermediate quantity," thus not attracting the stringent conditions of Section 37 of the NDPS Act. * The investigation was complete, negating the need for further custody. * They sought parity with other co-accused who had already been granted bail. * Crucially, they contended that Section 27A (financing) of the NDPS Act was misapplied, as mere financial transactions did not equate to "financing" illicit drug traffic in the manner envisioned by the statute. They also argued that the elements for invoking Section 111 of the BNS (organised crime) were not met.

State's Counter-Arguments: Mr. Anup Rattan, learned Advocate General, vehemently opposed the bail pleas, submitting: * The State is engaged in a "war against drugs" which are adversely affecting the youth. * Financial transactions clearly indicated the petitioners were financing drug activities orchestrated by Sandeep Shah , the alleged kingpin of an organised crime syndicate. * The police had collected WhatsApp/Signal chats and sent mobile phones for forensic analysis, expecting incriminating data. * The rigours of Section 37 of the NDPS Act were applicable due to the invocation of Section 27A. * The State highlighted a large-scale operation involving numerous individuals, substantial drug quantities, and even international connections, arguing that releasing the petitioners would jeopardize public safety and the ongoing investigation. The State also claimed to possess other undisclosed material detrimental to the petitioners.

Court's Meticulous Analysis and Legal Reasoning

Justice RakeshKainthla undertook a detailed examination of the evidence and legal provisions, referencing numerous Supreme Court and High Court precedents.

On Admissibility of Co-Accused Statements and Financial Transactions:

The Court reiterated well-settled legal principles: * Statements made by co-accused to police during investigation are hit by Section 162 of Cr.P.C. and inadmissible as evidence, as also confessions made to police officers are barred under Section 25 of the Indian Evidence Act (citing Dipakbhai Jagdishchandra Patel v. State of Gujarat and Tofan Singh v. State of Tamil Nadu ). * Financial transactions alone, without concrete proof that they were for drug-related activities, are insufficient to connect an accused to the crime (citing Amal E vs State of Kerala ). The Court noted, "The status report does not show that any heroin was recovered from these persons [to whom money was transferred]."

Interpretation of "Financing" under Section 27A NDPS Act:

The Court extensively discussed the scope of "financing" under Section 27A: * Agreeing with the Bombay High Court in Rhea Chakraborty Vs. Union of India , it held that "financing" implies more than just paying for drug purchases; it involves providing funds to make the illicit drug trafficking operational or sustainable. > "Interpreting the term financing as sale/purchase would make the provisions of Sections 20, 21, 22 and 23 of the ND&PS Act redundant, and a statute cannot be interpreted in a manner to make any part of the legislation redundant." * The legislature's distinct use of "sale," "purchase," and "financing" implies different meanings. The Court invoked Lord Atkin 's dissent in Liversidge v. Sir John Anderson on not giving strained meanings to ordinary words. * Since the prosecution's own case, as per the status report, was that money was transferred for "sale/purchase of drugs," Section 27A was prima facie not made out.

Applicability of Section 111 BNS (Organised Crime):

The Court found the invocation of organised crime charges wanting: * Section 111 BNS requires "continuing unlawful activity" by a member of an "organised crime syndicate," where more than one chargesheet has been filed against such a member for cognizable offences (punishable with 3+ years imprisonment) within the preceding ten years, and cognizance taken. * Citing Mohd. Hashim v. State of Kerala and Supreme Court decisions on analogous provisions in MCOCA and Gujarat C.T.O.C. Act (e.g., State of Maharashtra v. Shiva alias Shivaji Ramaji Sonawane ), the Court found no such predicate chargesheets against the petitioners or evidence linking them to a qualifying syndicate. > "The financial transaction without the statement of the co-accused that it was related to the drug trade will not show that the transaction was for the sale/purchase of drugs. Therefore, the petitioners cannot be connected to the drug trade and cannot be considered part of an organised crime syndicate involved in unlawful activity." * The right to silence means an accused need not explain transactions; the onus is on the prosecution.

On Rule of Law and Judicial Duty:

Justice Kainthla firmly addressed the State's "war on drugs" argument: * Quoting Lord Atkin ’s dissent in Liversidge v. Sir John Anderson : > "In this country, amid the clash of arms, the laws are not silent. They may be changed, but they speak the same language in war as in peace... the judges are no respecters of persons and stand between the subject and any attempted encroachments on his liberty by the executive, alert to see that any coercive action is justified in law." * The Court emphasized its duty to uphold citizens' liberty and ensure any encroachment is strictly as per law, resisting the temptation to be "more executive-minded than the executive."

Other Key Observations:

• Pending FSL Reports : "The State was supposed to collect the evidence first and arrest a person thereafter. It cannot detain a person in custody in the hope that something incriminating will be found against the person. This is putting the cart before the horse and is simply impermissible."
• Withholding Material : The police claim of possessing undisclosed material was rebuffed. "This submission is contrary to the Rule of Law... This means that the Courts should surrender their judicial authority to the police. This is unheard of in a democratic country governed by the Rule of Law." (citing Amit Kumar Sharma v. Union of India ).

The Decision and Its Implications

Finding insufficient prima facie material to connect the petitioners with offences under Sections 21, 27A, and 29 of the NDPS Act and Section 111(3) of BNS, the Court concluded that their further detention was not justified. The petitions were allowed, and Mukul Chauhan , Sandeep Dhiman, Akshit Verma @ Akshu, and Rajat Kreik were ordered to be released on bail upon furnishing bail bonds of ₹1,00,000/- each with one surety each, subject to standard conditions.

This judgment underscores the judiciary's role in meticulously scrutinizing evidence presented by the prosecution, especially in cases involving stringent penal provisions, and upholding the principles of admissibility of evidence and individual liberty. It serves as a reminder that arrests and continued detention must be grounded in legally admissible evidence rather than mere suspicion or anticipated findings.