Delhi HC Grants PMLA Bail to Two PFI Physical Trainers, Holds Payments for Services Cannot Be Proceeds of Crime Without Accomplished Scheduled Offence
Justice Purushaindra Kumar Kaurav granted bail to two PFI physical trainers accused under PMLA, finding ED had not established the foundational scheduled offence required to characterise their remuneration as proceeds of crime.
The High Court of Delhi on 2 July 2026 admitted two accused persons, Anshad Badruddin and Abdul Khader Puttur, to regular bail in a money laundering case arising from a National Investigation Agency FIR against the Popular Front of India. Justice Purushaindra Kumar Kaurav, sitting singly, held that the Enforcement Directorate had not cleared the threshold requirement under the Prevention of Money Laundering Act, 2002: demonstrating that the funds received by the applicants were derived from an accomplished scheduled offence. Because that foundational fact was absent, the question of whether the applicants exercised dominion and control over the money in their personal accounts simply did not arise. The decision also rested on over two years and three months of continuous pre-trial incarceration and the near-zero prospect of an early trial.
How the Applicants Came to Be Accused
The underlying ECIR — ECIR/STF/17/2022 — is premised on FIR No. RC-14/2022/NIA/DLI dated 13 April 2022, registered by the NIA under Section 120-B of the Indian Penal Code, 1860 and several provisions of the Unlawful Activities (Prevention) Act, 1967. The FIR alleged that office-bearers, members and cadres of an unlawful association conspired to raise and collect funds, both domestically and from abroad, for financing terrorist activities, promoting communal disharmony and radicalising vulnerable youth.
Neither applicant appeared in the main prosecution complaint dated 19 November 2022. Both were arrayed as accused for the first time in the fifth supplementary prosecution complaint dated 24 May 2024 — Anshad Badruddin as Accused No. 24 and Abdul Khader Puttur as Accused No. 26. The allegation against each was that he had served as a Physical Education trainer of the association and had received monies from it in that capacity.
Anshad Badruddin was arrested on 18 March 2024 from District Jail, Lucknow, where he was already in judicial custody in a separate matter. Abdul Khader Puttur was arrested on 19 March 2024 from Central Prison, Bengaluru, likewise in judicial custody in a separate matter. Both applied for regular bail before the Additional Sessions Judge, Special Court (PMLA), Patiala House Courts, New Delhi. Those applications were dismissed on 21 February 2025, prompting the present bail applications before the High Court.
What the ED Alleged Against Each Applicant
The ED's case against Anshad Badruddin was that he was appointed as a Physical Trainer by the association and used that role to instigate violent tendencies among vulnerable Muslims, disguising weapons and combat training as yoga and fitness sessions. He was said to have received Rs. 3,50,000 through the association's bank accounts between January 2018 and January 2021 in his Canara and ICICI accounts, along with unexplained cash deposits of Rs. 3,16,200. When questioned under Section 50 of the PMLA about these deposits, he allegedly failed to explain their source and questioned the authenticity of his own bank statements. His total attributed quantum was approximately Rs. 7,29,300.
The case against Abdul Khader Puttur was more elaborate. He was said to have held the positions of State Executive Council Member of the association's Karnataka unit from 2011 to 2022, General Secretary from 2013 to 2014, and Vice President in 2015. As a Physical Trainer, he was alleged to have provided training in the use of sickles, swords, knives and other implements under the guise of yoga and fitness classes. He received Rs. 2,16,000 from the association's Union Bank account and had unexplained cash deposits of Rs. 23,35,724 against a declared annual income of Rs. 3,00,000. His total attributed quantum was approximately Rs. 25,51,724.
The ED argued that, unlike earlier accused persons who had merely collected donations and deposited them into the association's own accounts, the present applicants were direct and personal recipients of the funds, and therefore stood in dominion and control of the alleged proceeds of crime.
The Legal Framework and the Parity Argument
Counsel for Anshad Badruddin pointed to three earlier decisions of the same Court that had released five other accused persons in the same ECIR. The principal decision was the common judgment dated 4 December 2024 in Parvez Ahmed v. Directorate of Enforcement (Bail Appln. 1859/2024), Abdul Muqeet v. Directorate of Enforcement (Bail Appln. 2001/2024) and Mohd. Ilyas v. Directorate of Enforcement (Bail Appln. 2012/2024). The Supreme Court had dismissed the Special Leave Petition against that judgment while directing that its findings be treated as prima facie in nature. Counsel also referred to decisions dated 16 February 2026 in Moideen Kutty K @ M.K. Faizy v. Directorate of Enforcement (Bail Appln. 3620/2025) and dated 29 May 2026 in Wahidur Rahman v. Directorate of Enforcement (Bail Appln. 3796/2025).
The applicants' argument, in substance, was that the role assigned to them was no graver — and in several respects lesser — than the roles of the accused persons who had already been enlarged on bail. It was also urged that the amounts they received predated the declaration of the association as an unlawful association, and that the triple test of flight risk, evidence tampering and witness influence was satisfied in their favour.
Counsel for Abdul Khader Puttur additionally submitted that the trial court's order of 21 February 2025 appeared to erroneously attribute certain factual particulars to his client and had, in one instance, conflated the individual antecedents of the two applicants with each other.
The ED, through Mr. Vivek Gurnani, opposed bail vigorously. It contended that the twin conditions under Section 45 of the PMLA were not satisfied, citing Vijay Madanlal Choudhary v. Union of India, (2022) SCC OnLine SC 929, Tarun Kumar v. Enforcement Directorate, 2023 SCC OnLine SC 1486, and Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1. It also pressed that money laundering is an economic offence of a class apart, and that the arrests from judicial custody complied with Section 19 of the PMLA, the objections to the arrest having been addressed in the remand orders dated 27 March 2024 and 30 March 2024.
How the Court Reasoned
Justice Kaurav began with the foundational structure of the PMLA offence. Section 3 of the Act targets any process or activity connected with the “proceeds of crime” and the projection of such property as untainted. Section 2(1)(u) defines proceeds of crime as property “derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence.” The Court reiterated the Supreme Court's holding in Vijay Madanlal Choudhary that only property derived as a result of criminal activity relating to a scheduled offence already accomplished can qualify as proceeds of crime.
The Court then addressed the ED's central distinction: that the present applicants, unlike Parvez Ahmed and others who merely deposited donations into the association's accounts, were personal and direct recipients of the funds and thus in dominion and control thereof. Justice Kaurav accepted that this factual difference existed but held that it did not alter the outcome. The question of dominion and control over proceeds of crime can arise only after it is first established that the property in question is in fact proceeds of crime — that is, derived from a scheduled offence already accomplished. Without that anterior foundation, the mere fact that money entered the applicants' personal accounts rather than an organisational account does not convert an unproved sum into proceeds of crime.
Crucially, the payments attributed to the applicants were, on the ED's own case, received “in lieu of” or “in exchange for” Physical Education training — that is, as remuneration for services rendered. The bulk of those credits spanned 2015 to 2021, well before the association was declared an unlawful association on 27 September 2022 and before any adjudicated finding of criminal activity emerged from the predicate FIR of 13 April 2022. Neither applicant was charge-sheeted in the predicate NIA offence: Abdul Khader Puttur, though named in the FIR, had not been charge-sheeted; Anshad Badruddin did not even figure as a named accused in the FIR.
The Court noted the seized documents suggesting that PE training was a cover for weapons training. Even taking that material at its highest, it established at best that the applicants participated in an activity that may itself need to be tested as a scheduled offence at trial. It did not establish that the remuneration was generated as a result of a scheduled offence already committed and accomplished, as Section 3 requires. To hold otherwise, the Court observed, would reproduce the very error disapproved in Parvez Ahmed: treating funds connected with the future or continuing commission of a scheduled offence as proceeds of that offence, putting the cart before the horse.
On the post-arrest statements, the Court applied the Supreme Court's ruling in Prem Prakash v. Union of India, (2024) 9 SCC 787, which held that any statement recorded under Section 50 of the PMLA after a person is in custody, by the very agency that effected the arrest, is inadmissible against the maker. Two of the four statements relied upon by the ED were recorded after the respective arrests: Abdul Khader Puttur's statements dated 28 March 2024 and 30 March 2024, and Anshad Badruddin's statement dated 31 March 2024. Only Abdul Khader Puttur's pre-arrest statements dated 16 January 2024 and 17 January 2024 remained usable, and those described the money as “honorarium” — confirming only that money changed hands, not that it was derived from a scheduled offence.
Quantum Below the Section 45 Threshold and Parity Considerations
The Court took note of the quantum attributed to each applicant. The approximately Rs. 7,29,300 attributed to Anshad Badruddin and the approximately Rs. 25,51,724 attributed to Abdul Khader Puttur were, in both cases, well below the Rs. 1,00,00,000 threshold contemplated by the proviso to Section 45 of the PMLA. While the Court declined to render a final view on that proviso's applicability, it held that the relatively modest quantum reinforced a liberal approach to bail, consistently with the approach taken in Wahidur Rahman.
On parity, the Court found that the present applicants' roles were no graver than those of Parvez Ahmed, Mohd. Ilyas, Abdul Muqeet, Moideen Kutty and Wahidur Rahman, all of whom had been enlarged on bail. The circumstance that the money had entered personal accounts rather than an organisational account did not, once the foundational scheduled offence question was resolved against the ED, produce a materially different outcome.
Prolonged Incarceration and Article 21
As a separate and independent ground, the Court held that both applicants were entitled to bail on account of prolonged incarceration and the improbability of an early trial. As on the date of the order, Anshad Badruddin had been in continuous custody since 18 March 2024 and Abdul Khader Puttur since 19 March 2024 — over two years and three months each, longer than the two years and two months that the Court had found sufficient in Parvez Ahmed to tilt the balance in favour of bail.
The prosecution complaints and supplementary complaints together run into several thousands of pages and arraign several hundred witnesses. Charges had not yet been framed against the present applicants, who were arrayed as accused only by the fifth supplementary complaint of May 2024. There was, the Court held, no reasonable likelihood of the trial concluding, or meaningfully commencing so far as the applicants were concerned, in the near future.
Relying on Union of India v. K.A. Najeeb, (2021) 3 SCC 713, and V. Senthil Balaji v. Enforcement Directorate, 2024 SCC OnLine SC 2626, the Court affirmed that the rigours of Section 45 of the PMLA cannot be permitted to sanction indefinite pre-trial detention. The constitutional guarantee under Article 21 does not yield entirely to special statutory conditions where incarceration has become effectively punitive.
On the triple test, the Court found that the applicants had remained in continuous custody for over two years without default, making flight risk unsubstantiated; the material relied upon by the ED was documentary and digital in nature and already seized; and the cited witnesses were overwhelmingly official witnesses against whom no substantive apprehension of influence was made out.
Order
Justice Kaurav allowed both bail applications and directed that each applicant be released on bail, subject to conditions. Each applicant must furnish a personal bond of Rs. 50,000 with one surety in the like amount to the satisfaction of the trial Court. Each must furnish a cellphone number to the Investigating Officer, keep it active and switched on at all times, and promptly inform the Investigating Officer in writing of any change in residential address or contact details. If either applicant holds a passport, it must be surrendered to the trial court, and neither may travel outside the country without prior permission of the trial court. Both are prohibited from contacting, visiting or offering any inducement, threat or promise to prosecution witnesses or persons acquainted with the facts, and from tampering with evidence or otherwise prejudicing the pending trial.
The Court directed that a copy of the judgment be forwarded to the concerned Jail Superintendent forthwith for necessary compliance. It expressly noted that the trial must proceed independently without being influenced by any observations made in the order. Both bail applications stand disposed of.