Delhi High Court: ED Must Establish Proceeds of Crime Before Opposing PMLA Bail

Latest ED / PMLA Legal Update: The Delhi High Court has recently granted bail to two accused persons in a money laundering case after finding that the Enforcement Directorate failed to prima facie establish that the payments received by them were “proceeds of crime” under the Prevention of Money Laundering Act, 2002.

The Court emphasized that merely receiving money, without first establishing that such money was derived or obtained from an accomplished scheduled offence, may not be enough to treat it as proceeds of crime at the bail stage.

This update is important for accused persons, families, complainants, business persons, public figures, professionals and lawyers dealing with ED summons, PMLA bail, money laundering complaints, proceeds of crime, Section 45 PMLA and white-collar criminal defence.

Case Snapshot

  • Court: High Court of Delhi at New Delhi
  • Bench / Justice: Hon’ble Mr. Justice Purushaindra Kumar Kaurav
  • Case Name: Anshad Badruddin v. Directorate of Enforcement and Abdul Khader Puttur v. Directorate of Enforcement through Assistant Director
  • Case Numbers: BAIL APPLN. 1989/2025 and BAIL APPLN. 2808/2025
  • Citation: 2026 LiveLaw (Del) 628
  • Legal Area: Prevention of Money Laundering Act, 2002; Section 3; Section 45; proceeds of crime; regular bail
  • ECIR: ECIR/STF/17/2022
  • Order / Judgment Date: 02 July 2026
  • Time of Pronouncement: Not specified in the reported order/source
  • Reported Update: LiveLaw report dated 7 July 2026, 2:13 PM IST
  • Main Legal Issue: Whether payments received by the applicants could be treated as proceeds of crime under PMLA without prima facie showing that they were derived from an accomplished scheduled offence

Introduction

That PMLA cases are serious in nature because they involve allegations of money laundering, attachment of property, ED summons, arrest, custody and strict bail conditions.

However, every money transaction does not automatically become money laundering. The prosecution must first establish the legal foundation that the property is “proceeds of crime” as defined under the PMLA.

The latest Delhi High Court update is important because it explains that the ED must prima facie establish the connection between the alleged money and the scheduled offence before opposing bail on money laundering grounds.

What Is the Core Issue in a PMLA Case?

That the core issue in a PMLA case is whether the property involved is proceeds of crime.

Under the PMLA, “proceeds of crime” generally means property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence.

Therefore, the existence of a scheduled offence and a link between that offence and the property are foundational requirements in money laundering prosecution.

What Did the Delhi High Court Consider?

That the Delhi High Court considered whether the payments received by the applicants could be treated as proceeds of crime at the prima facie stage.

The ED alleged that the applicants had received money in their personal accounts and were connected with physical training activities. The applicants argued that the alleged payments could not automatically be treated as proceeds of crime.

The Court noted that the foundational fact must first be established: whether the property in question is actually proceeds of crime derived from an accomplished scheduled offence.

Why “Proceeds of Crime” Is So Important

That “proceeds of crime” is the heart of a PMLA case. Without proceeds of crime, the offence of money laundering under Section 3 PMLA may not be attracted.

If money is received from a source but the ED cannot show that it was derived from criminal activity relating to a scheduled offence, the PMLA case may become vulnerable at least at the stage of bail or discharge, depending on the facts.

The legal question is not only whether money was received, but whether it was proceeds of crime within the meaning of PMLA.

Difference Between Money Received and Proceeds of Crime

Money received simply means that an amount came into a person’s account or possession.

Proceeds of crime means that the money was derived or obtained as a result of criminal activity relating to a scheduled offence.

This difference is crucial. A bank credit, payment, donation, remuneration or transaction does not automatically become proceeds of crime unless the statutory connection is shown.

Scheduled Offence and PMLA Link

That PMLA proceedings are linked with a scheduled offence. The alleged money laundering must have a connection with criminal activity relating to such scheduled offence.

If the scheduled offence foundation is weak, unclear or not connected with the alleged money, the accused may argue that the ingredients of PMLA are not satisfied.

That is why defence in PMLA cases often focuses on the relationship between the predicate offence, proceeds of crime and alleged laundering activity.

Section 45 PMLA and Twin Conditions

That Section 45 PMLA imposes strict conditions for bail. The court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and that the accused is not likely to commit any offence while on bail.

However, even while applying Section 45, the court must examine whether the basic ingredients of money laundering are prima facie made out.

If ED fails to establish the foundational link between the alleged property and proceeds of crime, the accused may get benefit at the bail stage.

Long Custody and Delay in Trial

That the Court also considered prolonged incarceration. In PMLA matters, long custody without realistic possibility of early trial may become a relevant factor while deciding bail.

In this case, the applicants had remained in custody for more than two years and three months. Charges were yet to be framed and the trial was not likely to conclude soon.

Courts have repeatedly emphasized that pre-trial custody should not become punishment before conviction.

Triple Test in Bail Matters

That apart from the statutory conditions under PMLA, courts may also examine the ordinary bail factors known as the triple test.

The triple test includes:

  • Whether the accused is a flight risk.
  • Whether the accused may tamper with evidence.
  • Whether the accused may influence witnesses.

If the material is largely documentary or digital and already seized, and the witnesses are mostly official witnesses, the argument of tampering or influence may require specific foundation.

Impact on Accused Persons in ED Cases

That accused persons in ED cases should understand that PMLA bail requires careful legal preparation. The defence should not be limited only to the argument of long custody.

The defence must examine whether the ED has established the basic ingredients of Section 3 PMLA, the connection with scheduled offence, the nature of alleged proceeds of crime and the accused’s role.

In many cases, the individual role of each accused becomes very important.

Impact on ED and Prosecution

That the ED must present a clear prima facie case showing how the alleged property is proceeds of crime and how the accused was involved in any process or activity connected with such proceeds.

General allegations may not be sufficient where the accused’s specific role is weak or the money trail does not show derivation from a scheduled offence.

PMLA prosecution requires careful linking of facts, documents, money trail, scheduled offence and accused’s conduct.

Why Individual Role Matters

That in cases involving multiple accused, courts may examine the individual role of each person separately.

Merely being associated with an organisation, receiving some payment or being named in a supplementary complaint may not automatically prove money laundering.

The prosecution must show how each accused was connected with proceeds of crime and the alleged laundering activity.

Defence Strategy in PMLA Bail

In a PMLA bail matter, the defence should carefully examine:

  • Whether there is a scheduled offence.
  • Whether the alleged property is proceeds of crime.
  • Whether the accused had dominion or control over such proceeds.
  • Whether the accused projected or claimed the property as untainted.
  • Whether the accused’s individual role is clearly shown.
  • Whether the evidence is documentary and already seized.
  • Whether witnesses are official or private witnesses.
  • Whether the accused has been in long custody.
  • Whether trial is likely to conclude soon.
  • Whether parity with co-accused is available.

Documents to Check in ED / PMLA Cases

Before preparing bail or defence in a PMLA case, the following documents should be reviewed:

  • ECIR details, if available.
  • Predicate FIR or scheduled offence record.
  • Prosecution complaint.
  • Supplementary prosecution complaints.
  • Arrest memo and grounds of arrest.
  • Remand orders.
  • Section 50 PMLA statements.
  • Bank account records and transaction details.
  • Attachment orders, if any.
  • Role attributed to each accused.
  • Evidence relied upon by ED.
  • Status of charge framing and trial.

Difference Between Suspicion and Prima Facie PMLA Case

That suspicion may lead to investigation, but bail opposition must be based on a legally sustainable prima facie case.

For PMLA, the ED must show more than suspicion. It must show the statutory connection between scheduled offence, proceeds of crime and the accused’s alleged involvement.

At the bail stage, the court does not conduct a full trial, but it does examine whether the basic legal foundation exists.

Can Long Custody Help in PMLA Bail?

That long custody can become a relevant factor, especially where the trial has not commenced, charges have not been framed or there is no realistic possibility of early conclusion.

However, long custody alone may not be sufficient in every case. It must be argued along with the merits of the case, role of accused, evidence status and Section 45 PMLA considerations.

The best strategy is usually a combined argument on both merits and prolonged incarceration.

Why This Update Matters for Bihar and Patna Litigants

That ED and PMLA cases are increasing in areas involving cyber fraud, financial transactions, bank accounts, shell entities, public funds, corruption allegations, predicate offences and attachment of properties.

Litigants from Bihar may face ED summons, freezing of bank accounts, attachment proceedings, prosecution complaints or bail issues before Special Courts and High Courts.

This update is important because it highlights that the ED must establish the proceeds of crime link and cannot treat every financial transaction as money laundering without legal foundation.

AEO: Frequently Asked Questions

Can every money transaction become proceeds of crime under PMLA?

No. The money or property must be derived or obtained as a result of criminal activity relating to a scheduled offence.

What is important for PMLA bail?

The court examines Section 45 twin conditions, proceeds of crime, scheduled offence link, role of accused, custody period, evidence status and possibility of trial conclusion.

Can long custody help in PMLA bail?

Yes, prolonged incarceration may help, especially where charges are not framed and trial is not likely to conclude soon. But each case depends on its facts.

Is receiving money in a bank account enough for money laundering?

Not by itself. The prosecution must show that the money is proceeds of crime and that the accused was involved in a process or activity connected with it.

Key Takeaway

That the key takeaway is that ED must prima facie establish the proceeds of crime link in PMLA cases.

Personal receipt of money, association with an organisation, or suspicion of illegal activity may not be enough unless the statutory foundation of money laundering is shown.

Conclusion

That the Delhi High Court’s latest PMLA bail update is important for ED cases, money laundering defence and white-collar criminal litigation.

The decision reinforces the principle that proceeds of crime must be established as a foundational requirement before Section 3 PMLA can be invoked against an accused.

For ED summons, PMLA bail, bank account freezing, attachment proceedings, prosecution complaint, Section 50 statements and white-collar criminal defence, timely legal advice and detailed document analysis are essential.

Legal Note: The outcome of any ED or PMLA case depends on the ECIR, scheduled offence, money trail, prosecution complaint, role of accused, custody period, Section 45 PMLA conditions and the specific facts of the case.