Jharkhand High Court Upholds Validity of Arrest in Rs. 750 Crore Money Laundering Case, Rejects Bail Plea of Amit Gupta

Court affirms adherence to legal provisions under PML Act, 2002 regarding grounds of arrest and "reason to believe", highlights grave nature of economic offences involving fake GST invoices and shell companies.

In a significant ruling on October 8, 2025, the Jharkhand High Court, presided over by Justice Sujit Narayan Prasad, dismissed the bail application of Amit Gupta, accused in a Rs. 750 crore fake Input Tax Credit (ITC) fraud and money laundering case. The case, investigated by the Directorate of Enforcement (ED), involves a complex syndicate operating through 135 shell companies across multiple states, including Jharkhand, West Bengal, Delhi, and others.

The petitioner, Amit Gupta, was charged under Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) and various sections of the Indian Penal Code (IPC), including offences related to cheating, forgery, criminal conspiracy, and criminal breach of trust. The complaint revealed Gupta's role as a key financial handler of the syndicate, responsible for laundering illicit funds generated from bogus GST invoices. He allegedly controlled several firms that claimed fake ITC worth approximately Rs. 47.51 crores and was involved in layering, possession, and use of proceeds of crime.

The Court meticulously examined whether the arrest of Amit Gupta complied with statutory mandates under Section 19(1) of the PMLA, which requires that the grounds and reasons for arrest be recorded in writing and communicated to the accused "as soon as may be." The petitioner’s counsel argued that these procedural safeguards were not followed, rendering the arrest illegal. However, the ED produced contemporaneous documents, including the arrest memo, grounds of arrest, and personal search memo, all signed by the petitioner, confirming compliance.

Furthermore, the Court noted that the petitioner was produced before the Chief Judicial Magistrate, Calcutta, within 24 hours, who granted transit remand to Jharkhand. The petitioner was represented by counsel during proceedings at every stage, and the Court observed that no prejudice was caused to the petitioner, even though the ED communicated the arrest to a friend over telephone per the petitioner’s own instruction.

On the substantive merits, the Court analyzed the charges and evidence detailed in the prosecution complaint, which included statements recorded under Section 50 of the PMLA from co-accused and other witnesses. These statements revealed the petitioner’s central role in the syndicate, including admission of generating bogus invoices and laundering proceeds of crime through complex financial transactions and property acquisitions.

The Court emphasized the statutory presumption under Section 24 of the PMLA that proceeds of crime are involved in money laundering unless the accused disproves the same. The petitioner failed to rebut this presumption. Citing multiple Supreme Court judgments, the Court reiterated that economic offences, especially those involving large-scale fraud and corruption, constitute a class apart and must be dealt with strictly. The Court also underscored that bail is an exception under the PMLA, requiring the accused to satisfy stringent twin conditions: reasonable grounds must exist to believe the accused is not guilty, and that he is not likely to commit offences while on bail.

The Court found that the petitioner did not meet these conditions and that granting bail would undermine the ongoing investigation and the statutory objectives of tracing and confiscating illicit assets. It further highlighted the grave societal impact of economic offences and the need for judicial caution in granting bail.

Accordingly, the Court dismissed the bail application, stating that the observations were prima facie and would not influence the trial court, which shall proceed uninfluenced by the High Court’s decision.

Bottom Line:

Compliance with Section 19(1) of PMLA regarding communication of grounds of arrest in writing is mandatory henceforth; statements recorded under Section 50 of PMLA are admissible evidence; economic offences like money laundering warrant stringent bail conditions under Section 45 of PMLA, 2002.

Statutory provision(s): Sections 3, 4, 19, 24, 45, 50, 65, 71 of 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, 1860; Sections 483, 484 of Bharatiya Nagarik Suraksha Sanhita, 2023.

Amit Gupta v. Directorate of Enforcement, (Jharkhand) : Law Finder Doc Id # 2792076