Vice President denied bail in Rs 3,269 crore bank fraud case
Supreme Court says twin conditions under PMLA mandatory even for bail pleas under Section 439 CrPC; parity with co-accused not automatic.
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Supreme Court says twin conditions under PMLA mandatory even for bail pleas under Section 439 CrPC; parity with co-accused not automatic.
He was just a purchase manager—not named in the first three complaints. But the Supreme Court still said: no bail.
On a November afternoon in 2023, Tarun Kumar, Vice President (Purchases) at Shakti Bhog Foods Ltd, learned that the highest court in the land had rejected his plea for freedom. The man who once verified invoices and approved procurement deals was now Accused No. 10 in a money laundering case involving Rs 3,269 crore—a sum large enough to fund a small city's budget for years.
When the consortium discovered the hole
The story begins not with handcuffs, but with a routine audit. On December 31, 2020, inside the CBI's Bank Securities and Fraud Cell in New Delhi, officers opened a thick file. A consortium of banks that had lent money to Shakti Bhog Foods Ltd (SBFL), a food manufacturing company, had discovered that the company had caused losses of approximately Rs 3,269 crore through financial irregularities. The papers inside that file—balance sheets, loan documents, internal memos—told a story that no one wanted to read. This wasn't a small accounting error. This was a gaping wound in the banking system.
The Central Bureau of Investigation (CBI) registered an FIR (a written complaint that starts a police investigation) against the company's directors and employees for corruption and cheating. Then the Enforcement Directorate (ED) stepped in. On January 31, 2021, it recorded an ECIR (the ED's equivalent of an FIR) and filed complaints under the Prevention of Money Laundering Act (PMLA), 2002.
Tarun Kumar was not named in the original FIR. He was not named in the first three complaints either. But on June 22, 2022, officers from the ED arrived at his location. The handcuffs clicked shut. He was named in the fourth supplementary complaint as Accused No. 10.
The purchase manager's alleged role
What did a Vice President of Purchases do that warranted arrest? The ED alleged that Kumar was involved in procuring fake invoices from shell companies—entities that exist only on paper. He was accused of transferring proceeds of crime, verifying fake bills for bank settlements, and siphoning funds abroad.
These were not passive acts. Each alleged action required active participation: signing off on a fake invoice, approving a payment to a shell company, certifying that a bill was genuine when it was not. The prosecution's case rested on statements recorded under Section 50 of the PMLA (a provision that allows authorities to record statements from witnesses and accused persons, which are admissible as evidence).
Three courts, three rejections
Kumar first approached the Special Judge at Rouse Avenue Court Complex in New Delhi. On December 23, 2022, the courtroom fell silent as the judge pronounced the order. Bail was rejected.
He then went to the Delhi High Court. On July 18, 2023, the judges reviewed the same file—the same invoices, the same bank statements, the same witness accounts. Bail was rejected again.
Finally, he appealed to the Supreme Court. On November 20, 2023, the bench of Justice Bela M. Trivedi and Justice Aniruddha Bose heard the arguments. The courtroom was quiet except for the rustle of papers and the measured voices of counsel. When the judgment was delivered, the weight of the decision settled into the room.
Each court asked the same question: had Kumar satisfied the twin conditions under Section 45(1) of the PMLA? These conditions are not ordinary bail requirements. They demand that the court must be satisfied on two counts: first, that there are reasonable grounds to believe the accused is not guilty of the offence; second, that the accused is not likely to commit any offence while on bail.
This is a high bar. It is deliberately so. Parliament designed it this way for certain serious offences, including money laundering.
Why parity didn't work
Kumar's lawyers argued that other co-accused had been granted bail. Why should their client be treated differently? This is a common argument in Indian courts—the principle of parity, rooted in Article 14 of the Constitution (the right to equality before the law).
The Supreme Court bench rejected this argument. The court held that parity cannot be applied mechanically. The focus must be on the specific role attributed to the accused whose application is under consideration. Where co-accused have different roles and responsibilities, grant of bail to one does not entitle another to bail on parity.
The court added a sharp observation: "Article 14 does not perpetuate illegality." If a wrong order was passed granting bail to someone else, others cannot claim similar treatment. Two wrongs do not make a right, even in bail jurisprudence.
The twin conditions that sealed the door
The core of the judgment turned on Section 45(1) of the PMLA. Kumar's lawyers argued that since the bail application was filed under Section 439 of the CrPC (the provision that gives High Courts and Sessions Courts special powers regarding bail), the twin conditions under the PMLA should not apply.
The Supreme Court disagreed. It held that the PMLA has overriding effect under Section 71 of the Act (which states that the PMLA prevails over other laws in case of conflict). Therefore, the twin conditions under Section 45 are mandatory and must be complied with even in applications under Section 439 CrPC.
The court found that Kumar had failed to discharge these conditions. The statements recorded under Section 50 of the PMLA constituted sufficient material to establish his involvement in the money laundering offence. An accused cannot be released merely because such statements are the primary evidence.
The bench also relied on the presumption under Section 24 of the PMLA (which presumes that proceeds of crime are tainted unless the accused proves otherwise). This reversed the usual burden of proof—it was Kumar who had to show he was not guilty, not the prosecution who had to prove he was.
When the trial is long but the law is clear
Kumar's lawyers also argued that the trial would take a long time, and that keeping him in custody indefinitely would violate his right to personal liberty under Article 21 of the Constitution.
The court acknowledged the concern but held that the apprehension of a long trial does not automatically entitle an accused to bail under the PMLA. Section 436A of the CrPC (which sets a maximum period for which an undertrial prisoner can be detained) provides a case-by-case remedy, but the twin conditions under Section 45 must still be satisfied.
The bench cited several precedents. The landmark judgment in Vijay Madanlal Choudhary v. Union of India (2022) upheld the constitutional validity of the PMLA's stringent bail provisions. In Gautam Kundu v. Directorate of Enforcement (2015), the court had established that the twin conditions apply to all PMLA bail applications. Rohit Tandon v. Directorate of Enforcement (2018) reinforced that economic offences require a stricter approach. The court also referred to Manish Sisodia v. CBI (2023), where the Supreme Court had recently denied bail to the former Delhi Deputy Chief Minister in the excise policy case, reinforcing the strict approach to economic offences.
Other cited precedents included State of Gujarat v. Mohanlal Jitamalji Porwal (1987), where the court observed that economic offences constitute a class apart; Y.S. Jagan Mohan Reddy v. CBI (2013) and Nimmagadda Prasad v. CBI (2013), both of which emphasised that the gravity of economic offences must be weighed against the right to bail; and State of Bihar v. Amit Kumar alias Bachcha Rai (2017), which held that the seriousness of the offence is a relevant factor in bail decisions.
What this means for corporate executives
For professionals holding senior positions in companies—Vice Presidents, CFOs, Purchase Managers—this judgment carries a clear warning. Being unnamed in the first complaint offers no protection. Being a mid-level executive rather than a director offers no shield. If the prosecution can show your involvement in financial irregularities through statements and documents, the twin conditions under Section 45 will apply with full force.
The court also made clear that economic offences warrant a stricter approach to bail. In State of Gujarat v. Mohanlal Jitamalji Porwal (1987), cited by the bench, the Supreme Court had observed that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail.
The ratio in Tarun Kumar also clarified a critical point about procedural law: the twin conditions under Section 45 of the PMLA are not merely directory—they are mandatory. Even when an accused approaches the High Court under Section 439 CrPC, which ordinarily gives wide discretion in bail matters, the PMLA's overriding effect under Section 71 means that the PMLA's conditions take precedence. This interpretation closes a potential loophole that lawyers might have exploited to bypass the PMLA's strict bail regime.
Furthermore, the judgment clarified the evidentiary value of Section 50 statements. Defence lawyers often argue that statements recorded by enforcement authorities are coerced or unreliable. The Supreme Court held that such statements are admissible in evidence and can constitute sufficient material to establish involvement in a money laundering offence. An accused cannot be released merely because these statements form the primary basis of the prosecution's case.
THE PLAY: If you hold a corporate position where your signature or approval can be linked to financial transactions, the PMLA's twin conditions apply to you—and "someone else got bail" is not a winning argument.
The door that stayed shut
With the afore-stated observations, the appeal is dismissed.
Tarun Kumar remains in custody. The purchase manager who was not named in the first three complaints is Accused No. 10, and the Supreme Court has said: no bail.