On September 9, 2024, the Delhi High Court granted bail to Sameer Mahandru in connection with a case under the Prevention of Money Laundering Act, 2002 (PMLA). The Court, presided over by Justice Neena Bansal Krishna, emphasised that the constitutional right to liberty under Article 21 of the Constitution takes precedence over the "Twin Test" for bail under Section 45 of the PMLA, particularly when the trial is expected to be unduly prolonged.

The court’s ruling arose from a bail application filed by Mahandru, who was arrested on September 28, 2022 by the Directorate of Enforcement.  The Applicant's Advocate raised several legal and factual contentions challenging the accusations against him. He argued that the essential element of "proceeds of crime," a core requirement to establish an offense of money laundering under the PMLA, had not been demonstrated by the ED. He contended that the ED’s case rested on speculative assumptions without any direct link to a scheduled offence. Furthermore, it was asserted that he had no involvement in the formulation of the Delhi Excise Policy and that the conspiracy to influence the policy had taken place between other individuals, notably Vijay Nair and members of the South Group, without his participation. His involvement, he maintained, was limited to providing neutral business suggestions as a stakeholder in the liquor industry.

The Respondent-ED claimed that the Applicant had facilitated the laundering of illicit proceeds of Rs. 294.45 crores and conspired with the South Group, which allegedly paid Rs. 100 crores in kickbacks to influence the excise policy formulation and implementation. It was asserted that he had given a 65% stake in his company, Indo Spirits, to members of the South Group with the intention of distributing profits generated through the policy. The ED further alleged that the Applicant had issued credit notes to various entities as part of a conspiracy to recoup the kickbacks and had destroyed mobile phones to conceal evidence. Mahandru’s defence vehemently rejected these allegations, pointing to the company's financial records, which indicated that Indo Spirits had a profit margin of only 1%, rendering the claim of substantial illegal kickback payments implausible.

In considering the bail application, the High Court noted that the basic argument on behalf of the petitioner was that there was no prima facie case against him. 

“If there is not even a remotest possibility of the Trial being concluded in the near future. Considering that the Applicant is in Judicial Custody since 28.09.2022 i.e. for almost two years and with a little hope of speedy completion of Trial, he would be deprived of his right to liberty under Article 21 and is therefore, entitled to grant of Bail,” the Court remarked.

Heavy reliance was placed on Manish Sisodia v. Central Bureau of Investigation, 2024 INSC 595, a case where the Apex Court clarified that Article 21 of the Constitution, which guarantees the right to personal liberty, must take precedence over the stringent bail conditions under Section 45 of the PMLA. The court reiterated the principle that when a trial is expected to take an extended period, the accused cannot be kept in indefinite detention as it would infringe their fundamental right to liberty. Justice Krishna observed that Mahandru had already spent nearly two years in custody and that the complexity of the case, with its voluminous records and hundreds of witnesses, made a speedy conclusion of the trial unlikely. This prolonged detention, the court held, would violate Mahandru's rights under Article 21.

The court also dismissed the ED's argument that Mahandru was deliberately delaying the trial by filing multiple applications. The court stated that,

"It cannot be said that there is any delay which is attributable to the applicant; rather it is the complexity of the matter, voluminous records and the number of witnesses which are required to be considered in the Trial, which would take a reasonable time.”

Instead, the court noted that the delay in trial proceedings was a natural consequence of the case’s complexity, including thousands of pages of documentary evidence and over 492 witnesses listed by the prosecution. The court also took into account Mahandru's clean antecedents, the fact that most of the evidence was documentary, and the absence of any substantial risk of him tampering with evidence or influencing witnesses.

Further supporting the bail decision, the court referred to a series of judgments that accentuated the importance of the right to personal liberty and the constitutional guarantee of a speedy trial. The Supreme Court’s decision in Union of India v. K.A. Najeeb 2021 INSC 50 was particularly relevant, as it emphasized that the stringent bail conditions under special laws like the PMLA must not result in indefinite pre-trial incarceration. Similarly, in Mohd. Muslim @ Hussain v. State (NCT of Delhi) Cri.Appeal SLP/915/2023, the Supreme Court held that where a trial is likely to be significantly delayed, the accused should be granted bail to avoid infringing their constitutional rights.

The court also observed that many co-accused in the case had already been granted bail, including Rajesh Joshi, Gautam Malhotra, Sarath Chandra Reddy, Raghav Magunta and Benoy Babu, noting that Mahandru had been granted interim bail on multiple occasions without any violation of the conditions imposed by the court. Additionally, the court pointed out that Mahandru had no prior criminal record and was unlikely to be a flight risk.

In concluding, the court granted Mahandru bail, subject to specific conditions, including the furnishing of a bail bond of Rs. 10,00,000 and two sureties, the surrender of his passport, and regular reporting to the investigating officer. Mahandru was also prohibited from leaving the country or contacting witnesses without prior permission from the court.

Case Details: Sameer Mahandru v. Directorate Of Enforcement, BA/1063/2024

Advocates for the Applicant: Mr. Dhruv Gupta, Mr. Anubhav Garg, Mr. Indhirajith Parbhakaran, Ms. Yogya Singh and Mr. Nishesh Gupta

Advocates for the Respondent: Special Counsel Zoheb Hossain, , Mr. Abhipriya Rai, Mr. Kartik Sabharwal, Mr. Vivek Gaurav, Mr. Kanishk Maurya and Mr. Pranjal TripathiMr. Vivek Gurnani, Mr. Siddarth Kaushik