Masasasong Ao v. Directorate of Enforcement & Anr. , 2026

The applicant, Masasasong Ao, sought regular bail in a PMLA complaint arising from an underlying investigation concerning alleged collection and routing of funds for NSCN(IM) through extortion and illegal taxation.

The PMLA proceedings originated from an NIA/predicate case involving allegations relating to terrorist funding and extortion.

The applicant was arrested in the PMLA proceedings on 18 October 2022, while he was already in custody in connection with the predicate proceedings.

The Enforcement Directorate alleged that the applicant knowingly helped route alleged proceeds of crime through bank accounts held in his name, his wife's name and entities connected with co-accused Alemla Jamir.

The ED relied upon various financial transactions, including substantial deposits and withdrawals, transactions following Jamir's arrest and an alleged statement that the applicant directed the transfer of approximately ₹1.18 crore.

The applicant disputed the allegations and contended that the relevant bank accounts were substantially controlled and operated by Alemla Jamir.

The applicant's investigation was complete and the prosecution had already filed the relevant complaints and supplementary complaints.

By 23 July 2026, the applicant had spent approximately 3 years, 9 months and 6 days in custody.

The maximum punishment relevant to the PMLA charge was seven years, and the applicant had therefore crossed one-half of the maximum sentence.

The prosecution had cited 27 witnesses, but only five witnesses had been examined by July 2026.

The Court also noted that the trial was not close to completion and there was no material indicating that the delay was attributable to the applicant.

The Delhi High Court granted bail to Masasasong Ao in the PMLA proceedings.

The Court acknowledged that the ED had material connecting the applicant with various financial transactions involving alleged proceeds of crime.

However, at the bail stage, the material did not conclusively establish that the applicant knew the criminal source of the funds and consciously participated in laundering them.

The Court held that merely showing the movement of allegedly tainted money through an account was not sufficient, by itself, to conclusively establish the offence under Section 3 PMLA.

The Court found that the applicant's explanation concerning the control of the accounts by Alemla Jamir could not simply be dismissed at the bail stage.

Regarding the second limb of Section 45, the Court found relevant factors in the applicant's favour, including the age of the transactions, completion of investigation, availability of documentary evidence and absence of material indicating a likelihood of reoffending.

The Court gave substantial consideration to the length of incarceration, particularly because the applicant had spent nearly four years in custody against a maximum PMLA sentence of seven years.

The Court held that the seriousness of the allegations in the separate UAPA proceedings could not, by itself, justify indefinite detention in the PMLA case.

The Court emphasized that pre-trial detention cannot be allowed to become punitive, particularly where the trial is unlikely to conclude within a reasonable period.

The Court therefore held that the restrictions under Section 45 PMLA had to be considered alongside the constitutional protection of personal liberty under Article 21.

Bail was granted subject to conditions, including furnishing a personal bond of ₹50,000 with one surety of the same amount, surrender of passport, restrictions on leaving India, cooperation with proceedings, attendance before the trial court and non-interference with witnesses or evidence.

The Court clarified that the bail order concerned only the PMLA proceedings and would not automatically result in release from custody required in the predicate NIA/UAPA case or any other proceeding.

Balancing Section 45 PMLA with Article 21: The judgment demonstrates that the stringent bail framework under Section 45 PMLA must operate consistently with the constitutional protection of personal liberty under Article 21.

Prolonged undertrial detention: The Court placed significant emphasis on the fact that the applicant had already spent nearly four years in custody against a maximum PMLA punishment of seven years.

Speedy trial principle: Section 436A CrPC was treated as a beneficial provision reflecting the constitutional concern against excessive undertrial detention, although the Court clarified that it does not create an automatic right to bail merely because half the maximum sentence has been completed.

Seriousness of allegations: The Court distinguished the seriousness of the predicate UAPA allegations from the legal question of whether continued custody in the separate PMLA proceedings was justified.

No mini-trial at bail stage: The Court did not finally determine whether the applicant was guilty or innocent. It applied the broad-probability standard relevant to Section 45 and left disputed factual questions for trial.

Meaning of money-laundering: The judgment emphasizes that Section 3 PMLA requires more than the mere presence or movement of allegedly illicit funds in an account. The prosecution ultimately has to establish the accused's direct or indirect involvement in a process or activity connected with proceeds of crime.

Importance of trial progress: The fact that only 5 of 27 prosecution witnesses had been examined was significant because there was no indication that the trial would conclude shortly.

Completion of investigation: Since the investigation was complete and relevant financial records had already been secured, the Court found reduced justification for continued incarceration on grounds of investigation or evidence preservation.

Limited role of parity: The bail granted to Alemla Jamir was not treated as automatically entitling Ao to bail because the circumstances of the co-accused were not identical.

Impact on PMLA bail jurisprudence: The decision reinforces the principle that stringent statutory bail conditions cannot operate in isolation from Article 21, particularly where prolonged custody and an uncertain trial timeline create a risk that pre-trial detention becomes effectively punitive.