Jharkhand High Court Upholds Arrest of Mohit Deora in Rs. 750 Crore Fake GST ITC Money Laundering Syndicate

Court emphasizes strict compliance with procedural safeguards under PMLA, 2002 and refuses bail citing strong prima facie evidence of involvement in massive economic offence.

In a significant judgment dated November 12, 2025, the Jharkhand High Court, presided over by Justice Sujit Narayan Prasad, dismissed the bail application of Mohit Deora, accused in a high-profile money laundering case involving fake Input Tax Credit (ITC) claims worth approximately Rs. 750 crores. The case arises from an Enforcement Case Information Report (ECIR No. ECIR/RZNO/18/2024) registered by the Directorate of Enforcement (ED) based on complaints filed by the Directorate General of GST Intelligence (DGGI), Jamshedpur.

The syndicate, as revealed in the investigation, operated across multiple states including Jharkhand, West Bengal, Delhi, Tamil Nadu, Telangana, Andhra Pradesh, Maharashtra, and Odisha. It was engaged in the creation and operation of about 135 shell companies run through dummy directors and proprietors, issuing fake GST invoices to illegally claim ITC without actual delivery of goods or services. Shiva Kumar Deora, the petitioner’s father, was identified as the mastermind, with associates Amit Kumar Gupta and Sumit Kumar Gupta playing key roles.

Mohit Deora was arrested on May 8, 2025, following summons issued under Section 50 of the Prevention of Money Laundering Act (PMLA), 2002. The arrest was challenged on grounds including alleged non-compliance with mandatory procedural requirements under Section 19(1) of the PMLA, specifically regarding the communication of grounds of arrest.

The Court meticulously analyzed the legal framework of the PMLA, particularly the provisions related to arrest, bail, and evidentiary standards. It highlighted the landmark Supreme Court rulings in Vijay Madanlal Choudhary v. Union of India (2023), Pankaj Bansal v. Union of India (2024), and others, affirming that the grounds of arrest must be communicated in writing as soon as possible, and that the Enforcement Directorate had complied with these requirements, supported by contemporaneous records signed by the petitioner.

The judgment further underscored the continuing nature of the offence of money laundering under Section 3 of the PMLA, 2002, which includes involvement in any process connected to proceeds of crime such as concealment, possession, acquisition, and use. The Court noted that Mohit Deora was not a mere bystander but an active participant who knowingly allowed his bank accounts to be used for layering illicit funds exceeding Rs. 210 crores, vastly disproportionate to his declared income.

Relying on detailed investigation reports and statements recorded under Section 50 of the PMLA, the Court found prima facie evidence of Mohit Deora’s involvement in acquisition, possession, and use of proceeds of crime, including investing in high-value properties and business capital infusion. The petitioner’s claim of ignorance was rejected, given his continued receipt of illicit funds even after his father’s arrest and his evasive conduct during investigation.

The Court also emphasized the statutory presumption under Section 24 of the PMLA, which requires the accused to prove the contrary once a charge is established, shifting the burden to the petitioner. It reiterated the special nature of economic offences like money laundering, referencing Supreme Court precedents that treat such crimes as grave offences warranting stringent bail considerations.

Considering the gravity of the offence, the vast quantum of illicit transactions, and the ongoing nature of the investigation, the Court concluded that granting bail would hamper the probe and send a wrong signal to society. It dismissed the bail plea, directing the trial court to proceed with the case uninfluenced by the observations made during bail proceedings.

This judgment reinforces the judiciary’s firm stance against economic offenders involved in sophisticated money laundering schemes and underscores the procedural rigor mandated under the PMLA, 2002, ensuring due process while safeguarding public interest and the integrity of the financial system.

Bottom Line:

Arrest under Section 19(1) of the PML Act, 2002 must be preceded by recording and communication in writing of "reasons to believe" and grounds of arrest to the accused; economic offences like money laundering require a stricter approach to bail, and mere familial relation does not absolve culpability in money laundering offences.

Statutory provision(s): Section 3, Section 4, Section 19(1), Section 24, Section 45 of the Prevention of Money Laundering Act, 2002; Section 50 of the Prevention of Money Laundering Act, 2002; Sections 132 of CGST Act, 2017; Sections 20 of IGST Act; Sections 34, 120A, 193, 195A, 201, 203, 204, 406, 409, 420, 465, 467, 468, 471 of Indian Penal Code

Mohit Deora v. Union of India, (Jharkhand) : Law Finder Doc Id # 2808147