Facts of the Case

This is Criminal Petition No. 2909 of 2023 before the High Court for the State of Telangana at Hyderabad, a bail application under Sections 437 and 439 CrPC filed by an accused (A.3) in a case registered by the Directorate of Enforcement, Hyderabad Zonal Office, under the Prevention of Money Laundering Act, 2002 (PMLA). This is a money-laundering case, not a GST case. The underlying predicate offence was Crime No. 29 of 2021 registered by the CID, Andhra Pradesh, against a former Special Secretary of the Andhra Pradesh State Skill Development Corporation (APSSDC) and private companies, alleging diversion and swindling of government funds invested in a skill-development project involving Siemens group entities, with a total project cost of about Rs.3,281.40 crores. The petitioner, a chartered accountant, was arraigned as A.3 in the ECIR and had been in judicial custody since 04.03.2023.

Issues Involved

  1. Whether the twin conditions for bail under Section 45(1) of the PMLA were satisfied in the petitioner's case.
  2. Whether continued incarceration was justified given the delay in filing a final report in the predicate offence and the petitioner's cooperation with the investigation.

Petitioner's Arguments

  • No charge sheet had been filed in the predicate offence for over 15 months, and this was the petitioner's first offence with no other complaints against him.
  • He had cooperated fully with the investigating agency, responding to every query, and the prosecution complaint under PMLA had already been filed on 01.05.2023.
  • Relying on a co-ordinate Bench's order in a similar case, it was argued that the second condition under Section 45(1)(ii) of PMLA stood satisfied, warranting bail.

Respondent's Arguments

  • The Enforcement Directorate's case, as reflected in its affidavits, detailed the manner of investigation and the specific role attributed to the petitioner in setting up fictitious firms/companies to allegedly cheat the government of crores of rupees.

Court Order / Findings

  • The Court found that, as in the cited parity case, prolonged incarceration without a charge sheet in the predicate offence for over 15 months, coupled with the petitioner's cooperation and lack of any other criminal antecedents, satisfied the relevant statutory conditions for bail under the PMLA.
  • Without commenting on the merits of the money-laundering allegations, the Court held that continued incarceration was not justified.
  • Bail was granted on the petitioner executing a personal bond of Rs.50,000/- with two sureties, subject to conditions including weekly appearance before the investigating agency and surrender of his passport.

Important Clarification

This is a PMLA bail order and expressly does not decide the merits of the underlying fraud/money-laundering allegations. GST does not feature in this case at all — it involves diversion of a government skill-development grant, not any tax dispute. The only takeaway for readers is a reminder of how courts weigh prolonged custody, cooperation, and parity with similarly-placed co-accused while deciding PMLA bail applications.

Sections Involved

  • Prevention of Money Laundering Act, 2002 — Section 45(1) (conditions for bail)
  • Sections 437 and 439, Code of Criminal Procedure, 1973
  • Sections 166, 167, 418, 420, 465, 468, 471, 409, 201, 109 read with 120B, Indian Penal Code, 1860, and Section 13(2) read with 13(1)(c)/(d), Prevention of Corruption Act, 1988 (predicate offence)

Decision – In Favour of

In favour of the petitioner to the limited extent of grant of bail, expressly without any finding on the merits of the money-laundering allegations, which remain to be tried.

Case Details

Court: High Court for the State of Telangana at Hyderabad
Case No.: Criminal Petition No. 2909 of 2023
Coram: Justice K. Sreenivasa Reddy
Date: 12 May 2023

Link to Download the Order

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