Info alone can justify arrest under PMLA: HC junks Sanjay Sureka bail plea

Kolkata: Observing that information alone can justify arrest under Prevention of Money Laundering Act (PMLA), the Calcutta High Court rejected the bail plea of industrialist Sanjay Sureka, who was arrested on December 18, 2024, in connection with alleged financial fraud and diversion of bank funds through a web of shell companies.

Justice Suvra Ghosh held that even “information” by itself can constitute “material” for forming the mandatory ‘reasons to believe’ before arrest under Section 19, making it clear that an accused cannot dictate what the Enforcement Directorate (ED) must consider at the point of arrest.

The court said the material available on record supported the satisfaction recorded by the arresting officer.

According to the ED, Sureka, as chairman and managing director of Concast Steel and Power Ltd, set up 62 shell companies, appointed 34 dummy directors drawn from relatives and employees, and carried out fabricated transactions using fictitious transportation challans. Investigators allege the company’s turnover was artificially inflated to secure extensive bank credit, which was then diverted for personal expenditure and for supporting front entities. The alleged proceeds of crime total Rs 6,210.72 crore.

Surekha’s counsel argued that the arrest was illegal, contending that the ED relied largely on his custodial statement and lacked sufficient material beforehand. The court disagreed, noting that the “grounds of arrest” and “reasons to believe” were given to him immediately and reiterating that the adequacy or sufficiency of the material behind an officer’s belief is not open to examination at the bail stage if statutory safeguards are complied with.

The court acknowledged a delay in forwarding the arrest order and material to the adjudicating authority, but found it did not vitiate the arrest since the core protections under Section 19(1) were met.

The court highlighted ED’s findings that Sureka was in touch with accountants and employees from custody, allegedly funding co-accused, and that his companies continued raising funds even after his imprisonment. Benami properties traced during investigation and the pendency of about 444 cases against him were also flagged as risks.

Concluding that Surekha had not satisfied the twin conditions for bail under the PMLA, the court dismissed the petition as premature in view of the scale and continuing nature of the investigation.