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Kerala High Court Directs Reconsideration of Prathapan's Bail Under PMLA Section 45 in Ponzi Case
In a significant ruling on the application of the , the has set aside the bail granted to Kolatt Dasan Prathapan, the prime accused in the High Rich Ponzi Scheme case, and directed the , to reconsider the matter afresh. Justice C.S. Dias delivered the judgment on , emphasizing that the Special Court had failed to apply the mandatory " " under .
The Case Behind the Controversy
Prathapan was arrested by the in connection with Crime No. ECIR/KC20/07/2024, alleging offences under . The prosecution's case is that Prathapan and other accused collected Rs. 25 lakhs from investors by promising high returns through the High Rich Ponzi Scheme, but subsequently refused to repay the investment or any returns, thereby cheating the complainants.
On , the Special Court granted Prathapan bail, primarily on the ground that he had been in judicial custody for over 15 months and that there was no likelihood of the trial commencing soon. The ED challenged this order before the High Court, arguing that the Special Court had not considered the rigorous conditions imposed by .
ED's Challenge and the Respondent's Defence
The ED, represented by
, contended that the Special Court's order was
"
, irrational and improper."
It highlighted that Prathapan was an accused in 15 other criminal cases registered under the
and the
, and had been convicted in three of them. The ED argued that such
made it likely that he would commit further offences if released on bail, a factor the Special Court overlooked.
In response, Prathapan's counsel, led by , argued that the bail had been granted by the Special Court in the exercise of its discretion, based on a change of circumstances. They asserted that Prathapan had scrupulously complied with all bail conditions imposed and that there was no illegality in the order.
The Mandate of Section 45 PMLA
Justice Dias examined , which lays down that no person accused of an offence under the Act shall be released on bail unless (i) the Public Prosecutor is given an opportunity to oppose the application, and (ii) if the Public Prosecutor opposes, the court is satisfied that there are for believing the accused is not guilty and is not likely to commit any offence while on bail. The court noted that applies the provisions only to the extent they are not inconsistent with the Act, and Section 71 gives the PMLA an .
Relying on precedents in Union of Indian Through the Assistant Director v. Kanhaiya Prasad (2025), Sheikh Javed Iqbal v. State of Uttar Pradesh (2024), and Senthil Balaji V v. Deputy Director, Directorate of Enforcement (2024), the High Court reiterated that the under Section 45 are mandatory and must be explicitly addressed while granting bail.
A Critical Omission
The High Court found that the Special Court's order contained no discussion whatsoever on the
.
"There is not a whisper in the order regarding any finding rendered on the satisfaction of the
envisaged under Section 45 of the Act,"
Justice Dias observed. The court further noted that it was undisputed that Prathapan had
, which itself was a ground to assume a
, yet the Special Court did not consider this.
Key Observations
-
"A reading of the above provision clearly reveals that an accused, who is alleged to have committed the offences under the Act, can be enlarged on bail, subject to the condition that the prosecutor must be given an opportunity to oppose the application and the Court must be satisfied that there are
to believe that the accused person is not guilty of committing the offence and he is not likely to commit any offence while he is on bail."
-
"As the Act being a special enactment, it is mandatory that the
enumerated under Section 45 of the Act are complied with while considering the application for the bail."
-
"There is not a whisper in the order regarding any finding rendered on the satisfaction of the
envisaged under Section 45 of the Act. Furthermore, it is not disputed that the respondent is a person with
, which is a ground to assume that there is a likelihood of him committing an offence, if he enlarged on bail."
The Final Verdict
The High Court allowed the ED's petition, setting aside the Special Court's bail order dated
. It directed the Special Court to reconsider Prathapan's bail application
"in accordance with law and as expeditiously as possible, at any rate, within 60 days from the date of production of a copy of this order, after affording both sides an opportunity of being heard."
Until a fresh decision is rendered, Prathapan will continue to be on bail under the same conditions imposed earlier.
This ruling reinforces the strictness of the PMLA's bail provisions and serves as a reminder that lower courts must meticulously apply the statutory requirements, even when considering prolonged custody of an accused.
