The Delhi High Court on 29 August 2025 upheld the Enforcement Directorate's provisional attachment order under the Prevention of Money Laundering Act, 2002 in a case arising from a bank fraud. Justice Suresh Kumar Kait, dismissing the petitioner's challenge, held that the ED's attachment powers under Section 5 of the PMLA were validly exercised and reaffirmed the constitutional validity of the twin conditions for bail under Section 45 of the Act, relying on the Supreme Court's decision in Vijay Madanlal Choudhary v. Union of India.
Background
The case concerned a money laundering investigation connected to a bank fraud in which the accused had allegedly siphoned off loan proceeds through shell companies. The ED initiated proceedings under the PMLA after the predicate offence under Section 420 of the Indian Penal Code, 1860 was registered by the Central Bureau of Investigation.
The ED provisionally attached properties belonging to the accused and connected entities under Section 5 of the PMLA. The petitioner challenged the attachment order before the Delhi High Court, contending that the properties attached had no direct nexus to the proceeds of crime and that the ED had overstepped its statutory authority. The petitioner also sought bail, arguing that the twin conditions under Section 45 — which require the court to be satisfied that there are reasonable grounds for believing the accused is not guilty and is unlikely to commit any offence while on bail — were unconstitutionally onerous.
Key Holdings
Justice Suresh Kumar Kait addressed both the attachment challenge and the bail application:
Provisional attachment upheld: The Court found that the ED had established a sufficient nexus between the attached properties and the proceeds of crime. The property trail documented by the ED demonstrated that loan proceeds had been layered through multiple entities before being invested in the attached assets.
Section 5 powers validly exercised: The Court held that the ED's exercise of provisional attachment powers under Section 5 of the PMLA was within the statutory framework, as the conditions precedent — including the formation of a reason to believe that the person is in possession of proceeds of crime — were satisfied.
Twin conditions for bail constitutionally valid: Relying on the Supreme Court's authoritative pronouncement in Vijay Madanlal Choudhary v. Union of India, the Court reaffirmed that the twin conditions under Section 45 of the PMLA do not violate the accused's fundamental rights. The conditions serve the legislative purpose of preventing the dissipation of proceeds of crime during trial.
Bail denied: Applying the twin conditions, the Court found that the petitioner had not demonstrated reasonable grounds to believe that the accused was not guilty of the offence of money laundering, and denied bail.
Implications for Practitioners
Defence practitioners should note the High Court's continued adherence to the Vijay Madanlal framework, which makes bail applications in PMLA cases significantly more challenging than in ordinary criminal matters. Bail strategy in PMLA proceedings must address both limbs of the twin conditions with specificity and evidentiary support.
For practitioners advising entities subject to ED investigations, the judgment reinforces the importance of maintaining clear documentation of asset acquisition sources. The Court's emphasis on property trails suggests that the ED's attachment methodology focuses on tracing rather than proportionality.
Prosecution counsel and ED officers should note that the judgment endorses thorough investigation documentation as the foundation for sustainable attachment orders. Courts are likely to uphold provisional attachments where the nexus between assets and proceeds of crime is systematically demonstrated.