Court holds insufficient material to link pre-2013 assets with alleged crimes from 2013-2017; highlights prolonged custody and remote trial conclusion as grounds for bail.
In a significant development, the Delhi High Court on October 15, 2026, granted regular bail to Punit Narendra Garg, a former executive director of Reliance Communications Limited (RCOM), in a money laundering case investigated by the Directorate of Enforcement (ED). The case relates to allegations of fraudulent borrowing and diversion of loan funds amounting to nearly ₹2,929 crore during the period 2013-2017.
The bail application was considered under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, read with Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA). Garg had been in custody since January 29, 2026, and his previous bail plea was rejected in June 2026 by the Special Judge.
The case stems from an ECIR registered following FIRs lodged by the Central Bureau of Investigation (CBI) based on complaints by State Bank of India and other banks against RCOM, Anil Ambani, and others, alleging criminal conspiracy and cheating related to diversion of loan funds. ED's prosecution under PMLA centers on the acquisition and disposal of certain overseas assets - specifically a yacht acquired in 2008 and a Manhattan apartment purchased in 2010 - along with payments made from overseas accounts towards Garg's daughters' educational expenses. The ED contended these assets were proceeds of crime connected to fraudulent borrowings during 2013-2017, asserting that later loans were used to refinance earlier borrowings that funded these acquisitions.
However, the Delhi High Court took a nuanced view on the critical issue of whether these assets, acquired prior to the alleged scheduled offences, could be classified as proceeds of crime under Section 2(1)(u) of the PMLA. The Court held that the prosecution had not sufficiently established a nexus between the pre-2013 acquisitions and the alleged criminal activities during 2013-2017. It emphasized that mere refinancing or repayment of earlier borrowings with fresh loans does not ipso facto render the earlier assets proceeds of crime.
On Garg's alleged role, the Court acknowledged ED's material showing his involvement in the subsequent disposal and management of the assets but noted that there was no conclusive evidence of his involvement in the original acquisition or in obtaining the fraudulent loans. The Court also considered Garg's defense that he was not responsible for the initial credit facilities and that payments towards educational expenses were approved employment benefits.
Further, the Court underscored the inadmissibility of statements recorded under Section 50 of the PMLA during custody against the accused, aligning with Supreme Court precedents. It also noted that the substantial documentary and electronic evidence had already been secured and that Garg's prolonged incarceration of over eight months without the commencement of trial, especially given the vast expansion of the prosecution case and voluminous documents, was unjustified.
Addressing the twin conditions for bail under Section 45 of the PMLA - reasonable grounds to believe the accused is not guilty and that the accused is not likely to commit any offence while on bail - the Court found both satisfied. Garg, aged 61, with no prior convictions, was held unlikely to interfere with witnesses or evidence if stringent bail conditions were imposed. Accordingly, the Court ordered bail on furnishing a personal bond and sureties, surrender of passport, restrictions on dealings with the subject assets, and cooperation with investigation and trial.
The Court clarified that its observations were limited to the bail application and would not influence trial proceedings. The decision reiterates the constitutional protection of personal liberty under Article 21 and the requirement that pre-trial detention under PMLA must be justified by concrete evidence and the prospect of timely trial.
This judgment highlights the judiciary's careful balancing of the seriousness of economic offences with safeguards against prolonged and unjustified pre-trial detention, especially where the connection between assets and alleged criminal activity remains debatable.
Bottom Line:
Prevention of Money-Laundering Act, 2002 - Regular bail - Where assets alleged to be proceeds of crime were acquired prior to period of scheduled offences mentioned in predicate FIRs, and material at bail stage did not sufficiently establish nexus of such assets with criminal activity relating to scheduled offence, twin conditions under Section 45 held satisfied - Continued incarceration also unjustified in view of prolonged custody and remote possibility of early conclusion of trial.
Statutory provision(s):
Prevention of Money Laundering Act, 2002 Sections 2(1)(u), 3, 45, 50; Bharatiya Nagarik Suraksha Sanhita, 2023 Section 483
Punit Narendra Garg v. Directorate of Enforcement, (Delhi) : Law Finder Doc Id # 2998047
