He cooperated ten times. The ED still arrested him. The court still granted bail.

When the Money Trail Frayed: Sanjay Jain’s Bail Battle and the Limits of the PMLA’s Twin Conditions

Sanjay Jain was not the mastermind. He was not the government official who allegedly inflated fertilizer prices. He was not the company that routed the commissions. He was, according to the Enforcement Directorate, an intermediary — a link in a chain that stretched from the fields of IFFCO to the bank accounts of shell companies. When the ED arrested him on 6 October 2022, after he had cooperated with investigators on ten separate occasions, the stakes were clear: a life behind bars while a trial that could take years played out, or bail under the notoriously strict twin conditions of Section 45 of the Prevention of Money Laundering Act.

Justice Vikas Mahajan of the High Court of Delhi, hearing Bail Appln. 3807/2022, had to decide whether the ED’s money trail was strong enough to keep Jain in custody. The answer turned on three things: the reliability of a key witness, the integrity of the predicate offence, and the weight the court could give to statements recorded under Section 50 of the PMLA at the bail stage.

The Fertiliser That Cost Crores

The story begins with a CBI FIR registered on 17 May 2021. The FIR alleged that officials of the Indian Farmers Fertiliser Cooperative Limited (IFFCO) and its subsidiary, Indian Potash Limited (IPL), conspired with private parties to import fertilisers at inflated prices. The excess money — the proceeds of crime, as the ED would later call it — was siphoned off through a web of intermediaries. The money moved through Uralkali, a Russian fertiliser supplier, and then through a series of Indian entities before reaching the alleged beneficiaries.

Three days after the CBI FIR, on 20 May 2021, the ED registered ECIR DLZO-I/43/2021. The investigation revealed two routes through which Jain allegedly received proceeds of crime. The first was a direct cash route through Ratul Puri. The second was an indirect route through Rayon Trading and the Alankit Group. Jain, the ED argued, was a crucial conduit.

But Jain’s defence attacked every link in that chain. The cash route, they said, was unsupported by any documentary evidence. The indirect route relied heavily on the statements of one man: Rajeev Saxena, a witness whose credibility, they argued, was deeply compromised.

The Witness at the Heart of the Case

Rajeev Saxena was not a disinterested observer. He was himself an accused in the predicate offence — the CBI case — and had turned approver. His statements under Section 50 of the PMLA formed the backbone of the ED’s case against Jain. But the defence pointed to inconsistencies. Saxena had made multiple statements, and they did not always match. In one version, he said Jain received money through a specific route. In another, the route changed. The defence argued that a man who could not keep his story straight could not be the sole basis for denying bail.

The ED countered with a familiar argument: at the bail stage, the court cannot test the credibility or reliability of witnesses. That is for the trial. They cited Satish Jaggi v. State of Chhattisgarh (2007) 11 SCC 195, where the Supreme Court held that a bail court cannot conduct a mini-trial or assess witness credibility. The ED also relied on Chandra Prakash Khandelwal v. Directorate of Enforcement (2023 SCC OnLine Del 1094) and Preeti Chandra v. Directorate of Enforcement (2023 SCC OnLine Del 3622), both of which held that the weightage of Section 50 statements is to be tested at trial, not at the bail stage.

Justice Mahajan, however, took a more nuanced view. He noted that while Section 50 statements are admissible, their evidentiary value is not absolute. At the bail stage, the court examines only broad probabilities. If a statement is internally inconsistent or contradicted by other material, its prima facie reliability diminishes. The court cannot ignore glaring inconsistencies simply because the trial is yet to begin.

This was a significant departure from the ED’s preferred position. The court was not conducting a mini-trial, but it was doing something more than rubber-stamping the prosecution’s case. It was applying a standard of “broad probabilities” — a standard that, in practice, gives the bail court more room to scrutinise the evidence than the ED would like.

The Predicate Offence Problem

Jain’s defence also attacked the predicate offence itself. The CBI FIR alleged offences under the Prevention of Corruption Act, 1988 — specifically, Sections 13(2) read with 13(1)(d), which deal with criminal misconduct by public servants. But IFFCO and IPL, the defence argued, are not government entities. They are cooperatives. The CBI, therefore, had no jurisdiction to investigate them under the PC Act. If the predicate offence was invalid, the entire money laundering case collapsed.

This was a bold argument, and it had some force. But Justice Mahajan refused to decide it at the bail stage. He noted that writ petitions challenging the CBI’s jurisdiction were pending before a coordinate bench of the Delhi High Court. It would be inappropriate, he said, to determine that issue in a bail application. More importantly, he pointed out that even if the PC Act provisions were inapplicable, the CBI FIR also alleged offences under Sections 120B (criminal conspiracy) and 420 (cheating) of the Indian Penal Code. These are independently scheduled offences under the PMLA. They can, by themselves, trigger money laundering proceedings, regardless of the PC Act’s applicability.

This was a crucial holding. It means that even if the CBI’s jurisdiction under the PC Act is ultimately struck down, the money laundering case against Jain can survive on the IPC offences alone. The defence’s “predicate offence” argument, while not without merit, was not a silver bullet.

The Twin Conditions: A Delicate Balance

The real battleground was Section 45 of the PMLA. As interpreted by the Supreme Court in Vijay Madanlal Choudhary v. Union of India (2022 SCC OnLine SC 929), the provision imposes two conditions for bail: the court must have reasonable grounds to believe that the accused is not guilty of the offence, and that the accused is not likely to commit any offence while on bail. This is a higher threshold than ordinary bail under Section 439 CrPC.

Justice Mahajan applied this test. He examined the money trail, the Section 50 statements, and the role attributed to Jain. He noted that the ED’s case rested heavily on Rajeev Saxena’s statements, which had inconsistencies. He also noted that several co-accused had been granted bail — though he was careful to distinguish their cases. Some had obtained bail when the twin conditions were struck down by the Supreme Court in Nikesh Tarachand Shah v. Union of India (2018) 11 SCC 1, a decision later reversed by Vijay Madanlal. Others had been granted bail on different facts.

The court also considered the fact that Jain had cooperated with the investigation on ten occasions before his arrest. He had not fled. He had not tampered with evidence. The investigation against him was complete, and the prosecution complaint had been filed on 5 December 2022. There was no suggestion that he would obstruct the trial.

THE TEST: At the bail stage under Section 45 PMLA, the court does not require proof beyond reasonable doubt. It asks only whether, on broad probabilities, there are reasonable grounds to believe the accused is not guilty. Inconsistencies in a key witness’s Section 50 statements can weaken those grounds.

What This Means for Practitioners

This judgment is a reminder that the PMLA’s twin conditions are not insurmountable. They are a high bar, but not an absolute one. The key is to attack the prosecution’s case at its weakest points — and in many money laundering cases, that weak point is the Section 50 statement.

The court has made clear that while Section 50 statements are admissible, they are not gospel. At the bail stage, the court can and should examine them for internal consistency and corroboration. If a witness has made multiple statements that contradict each other, the court can factor that into its assessment of “broad probabilities.” This is a significant tool for defence lawyers.

Second, the judgment clarifies that the validity of the predicate offence is not a bail-stage issue — at least not when writ petitions on the same question are pending. But it also opens a door: if the predicate offence is ultimately struck down, the money laundering case can still survive on independent IPC offences. Defence lawyers should not assume that attacking the predicate offence is a winning strategy; they need to show that the IPC offences, too, are unsupported.

Third, the judgment reinforces the importance of cooperation. Jain’s ten appearances before the ED, his lack of flight risk, and the completion of the investigation all weighed in his favour. In PMLA cases, where the twin conditions create a presumption against bail, cooperation can be a powerful counterweight.

The Bottom Line

For any advocate arguing a PMLA bail application, the lesson is clear: do not concede the reliability of Section 50 statements at the bail stage. Attack inconsistencies. Demand corroboration. And remind the court that “broad probabilities” is not the same as “prosecution’s version must be accepted.” The twin conditions are a test, not a trap — and a well-argued case can still clear it.