Punit Narendra Garg v. Directorate of Enforcement

What happened

The applicant was arrested on 29 January 2026 and remained in custody; the Special Judge dismissed his bail on 15 June 2026. The ECIR of 26 August 2025 followed an FIR of 21 August 2025 by the CBI on a State Bank of India complaint against Reliance Communications Ltd. (RCOM) and others, alleging a loss of ₹2,929.05 crore, with two further FIRs added in 2026; the alleged scheduled offences relate to 2013–2017. The ED identified three transactions: the 2008 acquisition and 2021 sale of the yacht 'Tian', the 2010 acquisition and 2023 sale of an apartment in Manhattan, and payments of USD 77,046.43 from overseas group accounts for the applicant's daughters' education, quantifying proceeds at about ₹149.77 crore. The ED linked these to the scheduled offences through the refinancing of earlier foreign borrowings by loans of 2013–2017, and relied on the applicant's communications about the sales. The applicant said the assets were acquired well before the offences, were not security for the impugned loans, that he became Executive Director only in October 2017, and that the fee payments were an employment benefit approved by management. The original complaint of 27 March 2026 cited 39 witnesses and 8,726 pages; the supplementary complaint of August 2026 added seven accused and about 68,658 pages, making a record of about 77,384 pages with 56 witnesses.

Questions before the court

• Are the twin conditions of section 45 of the PMLA met, and is continued custody justified, where the assets were acquired years before the scheduled offences?

Why the court ruled this way

The Court explained that section 45 conditions apply even if the investigation is substantially complete, but it does not conduct a trial, and the enquiry is one of broad probabilities (paragraph 12). Proceeds of crime under section 2(1)(u) must be derived from criminal activity relating to a scheduled offence, and under Prem Prakash the foundational facts must be shown (paragraph 13). The yacht and apartment were acquired in 2008 and 2010 while the scheduled offences relate to 2013–2017, and refinancing alone does not establish that earlier assets became proceeds of those offences; as in Pavana Dibbur, an earlier asset cannot ex facie be connected to later offences, though continuing laundering under Vijay Madanlal Choudhary does not dispense with that nexus (paragraphs 14 to 18). The applicant's communications may show knowledge and participation in the later sales, and knowledge is not required under Anoop Bartaria, but they do not resolve whether the assets were proceeds of crime (paragraphs 19 and 20). The custodial statements were not relied on (paragraph 21), the NCLT's order of 10 March 2026 did not exonerate the applicant (paragraph 22), and the education payments needed careful assessment (paragraph 23). On these probabilities there were reasonable grounds for believing the applicant is not guilty, which finding is limited to bail (paragraph 25). The applicant had been in custody over eight months, the prosecution had been greatly enlarged, and an early trial was unlikely, so under V. Senthil Balaji section 45 cannot justify indefinite detention (paragraphs 26 to 29). The second condition was satisfied, as risks could be met by conditions (paragraph 31).

Controlling point

Both conditions under section 45 were satisfied and continued detention was not warranted.

Order and next steps

The applicant was released on regular bail on a personal bond of ₹1,00,000 with two sureties of the like amount, with conditions to surrender his passport and not leave India without permission, to give contact details to the Investigating Officer, to attend every hearing, not to contact or influence witnesses or tamper with evidence, not to give instructions on disposal or investment of the assets or sale proceeds without permission, and to join further investigation. The Directorate may seek cancellation on breach, and observations are confined to the bail application and not to influence the Special Court on charge or trial.

Practical implications

An accused in a PMLA case can challenge the nexus between property and a scheduled offence at the bail stage, and long custody with a growing prosecution record can support bail with conditions.

Limits of this ruling

• The Court expressly confined its findings to the bail application; it did not decide whether the assets are proceeds of crime or the guilt of the applicant, and noted that the investigation may continue.