Jammu & Kashmir and Ladakh High Court Denies Pre-Arrest Bail To Ex-Army Man Accused In ₹16.81 Cr Crypto Ponzi Scam; Says Luring Investors With Fake 'Emollient Coin' Is Heinous Economic Offence
Isabella Mariam
The High Court of Jammu & Kashmir and Ladakh Single Bench of Justice Mohd. Yousuf Wani has denied a petition seeking anticipatory bail under Section 482 of the Bhartiya Nagarik Suraksha Sanhita, 2023. The court declined to grant pre-arrest relief in connection with an alleged large-scale economic fraud involving cryptocurrency, holding that "there appears to be no merit in the application" and asserting the necessity of custodial interrogation for the investigation to proceed effectively. The application was accordingly dismissed.
The petitioner moved the High Court under Section 482 of the Bhartiya Nagarik Suraksha Sanhita, 2023, seeking anticipatory bail in ECIR No. ECIRO/SRZO/922 registered under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA). It was submitted that the petitioner, a former Indian Army serviceman with clean antecedents, had been implicated in a false and frivolous manner despite being a victim himself. He contended that he had not received any notice or summons prior to a raid conducted by the Enforcement Directorate (ED) at his Dehradun residence on 25.01.2025.
According to the petitioner, his association with a company named "Emollient Coin Ltd" began in 2017, when he was approached by its owner to serve as a promoter due to his administrative experience. He claimed to have invested Rs. 10 lakhs from his retirement fund and persuaded some acquaintances to join the scheme, unaware of any fraudulent intent. The company, incorporated in London, was allegedly dissolved in 2019. A related FIR (No. 16/2020) had been registered at Police Station Leh, Ladakh, under Section 420 of IPC (now corresponding to Section 318 of BNSS), naming co-accused A.R. Mir and Ajay Kumar Choudhary.
The petitioner denied any ownership or managerial control over Emollient Coin Ltd or its successor company M/s Tech Coin Ltd. He also challenged the allegations that Rs. 2.05 crores were transferred to him, arguing that no such documentary proof had been shown. He expressed readiness to cooperate with the investigation, surrender his passport, and abide by any conditions imposed by the court.
In response, the Directorate of Enforcement opposed the application, terming the petitioner the mastermind behind a Ponzi scheme executed under the guise of cryptocurrency investment. It was submitted that the petitioner, along with his associates, organized seminars across India and abroad to promote Emollient Coin, falsely promising returns up to 40% and commissions of 7% on investments. The scheme attracted thousands of investors, particularly in Leh, where over 2,000 victims were identified.
According to the ED, the petitioner evaded investigation, failed to respond to summons under Section 50 of the PMLA, and was allegedly residing outside India. Cash worth Rs. 91 lakhs were seized during searches on 02.08.2024 at six premises linked to the petitioner and co-accused. The ED claimed the petitioner controlled mobile applications used for the fraud, with the proceeds of crime amounting to Rs. 6.05 crores, including Rs. 57 lakhs directly linked to him.
The agency further cited confirmed orders from the Adjudicating Authority under the PMLA for seizure of digital evidence, cash, and accounts. It was alleged that despite notice, the petitioner remained untraceable, and his custodial interrogation was necessary.
The court stated "Keeping in view the perusal of the instant bail application, the objections filed in rebuttal and the consideration of the rival arguments advanced on both the sides, this Court in the light of law on the subject is convinced that it may not meet the ends of justice in case the petitioner is granted the extra ordinary concession of pre-arrest bail."
Referring to the origin of anticipatory bail, the court observed "Originally, concept of pre-arrest bail was conceived after confronting with the situations in the society whereunder on account of political and other rivalries and differences, arrests used to be managed and facilitated on account of frivolous charges."
The court quoted extensively from the Supreme Court’s judgements in Siddharam Satlingappa Mhetre v. State of Maharashtra and Sushila Aggarwal v. State (NCT of Delhi) to outline parameters for anticipatory bail. These included factors such as the gravity of the accusation, antecedents of the accused, possibility of fleeing justice, and risk of tampering with evidence. It also referred to Section 45 of the PMLA, which imposes twin conditions on granting bail: opportunity for the public prosecutor to oppose, and satisfaction of the court that the accused is not guilty and will not reoffend.
The court stated, "The petitioner is alleged to have absconded during investigation of the case and to have not turned up for cooperation with the investigating agency despite issuance of formal notices under law."
Further, “The presence of the accused in custody before the Investigating Agency appears to be imperative in the facts and circumstances of the case for the logical and result oriented investigation."
The court concluded that in the context of the allegations, the nature of evidence, the petitioner’s conduct, and the statutory bar under Section 45 of PMLA, the relief sought could not be granted. The concluding directive was stated as follows:
"For the fore going discussion, there appears to be no merit in the application which is dismissed."
Advocates Representing the Parties:
For the Petitioners: Mr. Adwait Singh Sirohi, Advocate; Mr. Hemant Mishra, Advocate; Mr. Abid Khan, Advocate
For the Respondents: Mr. Vishal Sharma, Deputy Solicitor General of India
Case Title: Naresh Kumar Gulia v. Directorate of Enforcement & Anr.
Case Number: Bail Application No. 51/2025 with CrlM No. 331/2025
Bench: Justice Mohd. Yousuf Wani
