Delhi High Court grants bail to Punit Garg, finding ED’s link between pre-existing overseas assets and later alleged loan fraud insufficient at this stage

The applicant sought regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, read with Section 45 of the Prevention of Money-Laundering Act, 2002 (PMLA).

He was arrested on 29 January 2026 in proceedings alleging money laundering arising from loans obtained by Reliance Communications Limited (RCOM) and allegedly diverted through overseas entities; his earlier bail application was dismissed on 15 June 2026.

The Enforcement Directorate (ED) attributed to him dealings involving a yacht acquired in 2008, a Manhattan apartment acquired in 2010, and payments for his daughters’ educational expenses.

It alleged that later RCOM loans obtained during 2013–2017 refinanced earlier borrowings connected to the assets, and relied on communications concerning their subsequent sale and the use of sale proceeds.

The applicant disputed the connection between the pre-existing assets and the alleged scheduled offences, denied involvement in obtaining or diverting the relevant loans, and relied on the duration of his custody, the documentary nature of the evidence, and the enlarged prosecution record.

At the time of the High Court’s decision, he had been in custody for over eight months; the supplementary complaint had substantially increased the number of accused, documents, and witnesses, and trial had not commenced.

1. Whether the material provided reasonable grounds for believing that the applicant was not guilty of the PMLA offence, as required by the first condition in Section 45, particularly where the assets were acquired before the period of the scheduled offences alleged in the predicate FIRs.

2. Whether the applicant was unlikely to commit an offence while on bail, satisfying the second condition under Section 45.

3. Whether the applicant’s period of custody, the enlarged prosecution record, and the likely delay in trial supported release on bail, notwithstanding Section 45’s restrictions.

Section 45 of the PMLA requires the Court, where the Public Prosecutor opposes bail, to be satisfied that there are reasonable grounds for believing the accused is not guilty and is unlikely to commit an offence while on bail; the inquiry at the bail stage is based on broad probabilities and is not a trial of the allegations.

Under Section 2(1)(u), “proceeds of crime” must be property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, or the value of such property; the statutory presumption under Section 24 operates only after the foundational facts concerning the scheduled offence, proceeds of crime, and the accused’s connection to them are established.

Section 3 is not confined to those who committed the scheduled offence or originally acquired the property, but the property must still qualify as proceeds of crime.

The Court relied on *Vijay Madanlal Choudhary v. Union of India* on the continuing nature of money laundering, *Prem Prakash v. Union of India* on foundational facts and the inadmissibility against its maker of a custodial Section 50 statement recorded by the same investigating agency, and *Pavana Dibbur v. Directorate of Enforcement* on the significance of whether property was acquired before the acts constituting the scheduled offence.

It also applied the principle in *V. Senthil Balaji v. Deputy Director, Directorate of Enforcement*, as followed in *Mahesh Joshi v. Directorate of Enforcement* and *Arvind Dham v. Directorate of Enforcement*, that Section 45 does not justify indefinite pre-trial detention where trial is unlikely to conclude within a reasonable time.

The Court treated the character of the assets as proceeds of crime as distinct from the applicant’s role in their subsequent sale or use.

Although ED relied on a refinancing trail linking later loans to earlier borrowings and on communications showing the applicant’s involvement in subsequent dealings, the yacht and apartment had been acquired in 2008 and 2010, before the 2013–2017 scheduled offences identified in the predicate FIRs.

On the material then before it, the Court considered the connection between those assets and criminal activity relating to the alleged scheduled offences insufficiently established; the possibility of further investigation could not substitute for proof of that nexus at the bail stage.

The applicant’s communications and the payment records were relevant, but did not resolve the underlying proceeds-of-crime question; the Court assessed the electronic and documentary material independently of his custodial statements.

It also found that the enlarged prosecution record, incomplete procedural steps, and lack of any realistic prospect of an early trial made continued detention a significant Article 21 concern, while the risks identified by ED could be addressed by conditions.

Considering the applicant’s circumstances and the documentary evidence already secured, the Court was also satisfied that the second condition under Section 45 was met.

It directed the applicant’s release on a personal bond of ₹1,00,000 with two sureties of the like amount, subject to conditions including surrender of his passport, restrictions on travel and contact with witnesses, cooperation with further investigation, and no dealings concerning the assets or proceeds without the Special Court’s permission.

The Court clarified that its observations were confined to the bail application and would not influence the Special Court at trial.