Five days to forward the arrest material did not vitiate the arrest, but twenty months in custody with 98 witnesses to go did earn bail
Justices Aravind Kumar and Vipul M. Pancholi rejected the Section 19(2) challenge on practicalities and then granted bail in a ₹6,210 crore money laundering case because process must not become punishment.
The allegation is one of the larger ones to come out of a steel company's insolvency: a web of financial transactions said to have been orchestrated to inflate turnover, secure credit from a consortium of banks led by the State Bank of India, and divert the funds for personal enrichment through 62 shell companies, with 34 dummy directors and 20 companies manned by relatives. The proceeds of crime are put at ₹6,210.72 crore, of which ₹777.10 crore has so far been attached. On 14 October 2026 the Supreme Court granted the principal accused bail, having first rejected the two legal attacks he made on the arrest itself.
How the case was built
The chronology matters because the Court's conclusion turns on it. A corporate insolvency resolution process was initiated against M/s Concast Steel and Power Limited on 7 November 2017; it has since concluded and the company has gone into liquidation. On 8 October 2021 the Liquidator applied under Sections 43, 45 and 66 of the Insolvency and Bankruptcy Code alleging fraudulent and avoidable transactions by the management during or prior to the resolution process. The National Company Law Tribunal dismissed that application by a detailed order, and the order was never challenged.
On 6 September 2022 the Central Bureau of Investigation registered an FIR under Sections 420, 477A and 120B of the Indian Penal Code and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act. An Enforcement Case Information Report followed on 24 March 2023, roughly a year and three months after the FIR, against the appellant and four other accused. He was arrested by the Enforcement Directorate on 18 December 2024 and had been in custody about 20 months when the appeal was heard, against a maximum punishment of seven years under the Prevention of Money Laundering Act. The Calcutta High Court had refused regular bail on 14 November 2025.
The attack on the arrest
Counsel for the appellant argued that the arrest was vitiated by non-compliance with Section 19(1) and (2) of the PMLA and that, the arrest being bad, Section 45 could not be invoked at all. The specific complaint was a five-day gap: the appellant was arrested on 18 December 2024 and the material under Section 19(2) was forwarded to the Adjudicating Authority on 23 December 2024.
A second argument went to the quality of the paperwork. The “Grounds of Arrest” and the “Reasons to Believe”, both dated 18 November 2024, were said to be virtually identical but for cosmetic variations in the concluding paragraph, which was offered as evidence of non-application of mind. The appellant had also not been interrogated while in custody.
The third limb was delay. The Enforcement Directorate had filed its prosecution complaint on 15 February 2025 categorically stating that the investigation as against the appellant was complete; a first supplementary complaint followed on 11 July 2025 and a second on 1 July 2026. Between them, the three complaints involve 97 accused persons, 48 prosecution witnesses and approximately 15,000 pages of relied-upon documents, while the investigation remains pending against other accused. The sheer volume, it was submitted, made it unlikely that the trial would begin or conclude within a reasonable timeframe. Reliance was placed on Union of India v. K.A. Najeeb, Arvind Dham v. Directorate of Enforcement, Basudeb Bagchi v. Enforcement Directorate, Arvind Walia v. Directorate of Enforcement and Padam Chand Jain v. Enforcement Directorate.
The shape of the allegation
It is worth being clear about what the Directorate says happened, because the Court's refusal to keep the appellant in custody says nothing about whether it is true. The predicate offence is the CBI's FIR of 6 September 2022; the money laundering investigation was opened by an Enforcement Case Information Report of 24 March 2023 against him and four others. The accusation is that he orchestrated a complex web of financial transactions to fraudulently inflate the company's turnover, secure credit from a consortium led by the State Bank of India, and divert those funds for personal enrichment through 62 shell companies, with 34 persons made dummy directors and 20 of the companies manned by his relatives.
The quantum is what gives the case its weight. Proceeds of crime are put at ₹6,210.72 crore, of which only ₹777.10 crore has been attached under the PMLA so far — about one-eighth. The Directorate also told the Court that the appellant is involved in over 444 cases. Against that, the scale of the prosecution's own record is the appellant's strongest point: three complaints naming 97 accused, 48 prosecution witnesses listed and around 15,000 pages of relied-upon documents, with the investigation still pending against the other accused. The Directorate's first complaint, filed on 15 February 2025, had itself recorded that the investigation so far as the appellant was concerned was complete.
The Directorate answered that the appellant had been produced before the Special Court within 24 hours, that the Section 19(2) complaint was misconceived because a post-arrest procedural requirement cannot be converted into a pre-remand sanction requirement, and that the section prescribes no automatic invalidation of arrest as the consequence of delayed forwarding. On the identical documents, it submitted that mere similarity causes no prejudice; the test is whether the accused was made aware of the essential basis of his arrest and whether the Special Court was able to examine the existence of material and record satisfaction under Section 19(1). The core safeguards had been complied with: the authorised officer had material in possession, reasons to believe were recorded in writing, grounds of arrest were furnished, and production before the competent court happened within 24 hours. It pressed the gravity of an economic offence involving more than ₹6,210.72 crore and said the appellant is involved in over 444 cases.
“Immediately”
The Court began by framing the balance it had to strike. In a bail matter, especially in serious offences, the job of a court is to balance the rights of the State with those of the arrestee. Under special laws such as the PMLA the conditions for bail are stringent and the circumstances in which it can be granted are rare, for the simple reason that economic offences of large magnitude punch a hole through the financial fabric of the country, with a top-down ripple effect through the whole ecosystem and large consequences for most of the population. That, the Court said, is the justification for making the PMLA stringent. In the same breath, sight must not be lost of the fact that institutions have a duty to investigate expeditiously, “or else the justification to keep an accused person under custody for an indefinite period of time”. Process must not be turned into a punishment unto itself.
On the arrest, the Court disagreed with the appellant, and gave a reason of statutory construction. There is no timeline in the PMLA for forwarding the arrest order and the material in possession to the Adjudicating Authority; it has to be done “immediately”. The word does not mean within 24 hours or within any set time limit; it means the material has to be transferred expeditiously and simultaneously. Where the records of a case run into thousands of pages, it is natural for the arresting officer to require some time, and that time cannot be strictly defined — so long as the forwarding is simultaneous with the arrest, with no delay except what is absolutely necessary, it does not fall foul of Section 19(2). “Practicalities must not be rendered otiose.” An investigating agency collecting, assimilating and compiling evidence may face administrative requirements that take a few days. A delay of five days therefore does not jeopardise the arrest.
Why bail followed anyway
Having upheld the arrest, the Court agreed with the appellant on the proposition that actually decided the appeal. The magnitude of the case renders it impossible for the trial to be completed anytime soon. The appellant has been in custody for over 20 months for an offence carrying a seven-year maximum. The investigation is complete so far as he is concerned. No purpose will be served by keeping him behind bars now.
For the law, the Court relied on Manish Sisodia v. Directorate of Enforcement: the twin conditions under Section 45 of the PMLA cannot override the constitutional safeguards under Article 21, and prolonged incarceration, if allowed to continue, will set at naught the constitutional safeguards extended to accused persons. The culmination of the trial is a time-consuming process, since the trial court will have to go through documents running into thousands of pages and examine around 98 witnesses. The appellant must not be subjected to the rigours of custody as long as the trial is pending.
There is a quiet asymmetry in the two halves of the judgment that is worth noticing. The agency won the argument about its own compliance, on the ground that a large record makes some delay unavoidable; and then lost the argument about custody, on the ground that the same large record makes a timely trial impossible. The size of the file that excused the five days is the size of the file that got the appellant out.
Bail was granted subject to bail bonds to the satisfaction of the trial court and to such other terms and conditions as it may impose. The appellant must deposit his passport with the trial court and not leave the country during the pendency of the trial without its prior permission. While on bail he must not attempt to influence witnesses or tamper with evidence, and on breach of any condition the trial court is at liberty to cancel bail. The Court recorded that the observations made are not to be treated as findings on the merits. The appeal was allowed.