Kerala High Court | Regular Bail Granted to Former MLA and Associate in ₹20 Crore PMLA Case | Continued Detention Held Unwarranted
Safiya Malik
The High Court of Kerala Single Bench of Justice Bechu Kurian Thomas granted regular bail to former MLA M.C. Kamarudheen and his business associate T.K. Pookoya Thangal in a case under the Prevention of Money Laundering Act, 2002. The petitioners, accused of diverting over ₹20 crores of investors’ money through four companies, were ordered to be released from custody under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The Court held that their continued detention was unwarranted in view of the prolonged custody already undergone and directed their release on bail subject to strict conditions.
The complaint forming the basis of the present bail applications was filed by the Enforcement Directorate (ED) before the Special Court constituted under Section 43(1) of the Prevention of Money Laundering Act, 2002, at Kozhikode. It was registered as ECIR No.KZSZO/06/2020. The prosecution alleged that the petitioners, who were senior political and social figures, were instrumental in the incorporation of M/s. Fashion Gold International Private Ltd. in 2006, and subsequently three other sister companies engaged in jewellery business.
According to the Enforcement Directorate, the petitioners, who held positions as Chairman and Managing Director respectively, collected substantial sums of money and gold from members of the public under deposit schemes, promising high dividends and profits. These funds were allegedly used to establish jewellery business branches at various locations. However, the petitioners failed to honour their assurances of returns. Numerous depositors subsequently lodged complaints, leading to registration of multiple crimes across districts in Kerala. Investigations revealed that the companies collected deposits without legal authority and diverted funds to purchase immovable properties in the personal names of the accused, thereby engaging in money laundering.
The Enforcement Directorate accordingly alleged offences punishable under Sections 3 and 4 of the PMLA. In addition, predicate offences were recorded under Sections 406, 409 and 420 read with Section 34 of the Indian Penal Code, Section 5 of the Kerala Protection of Interest of Depositors in Financial Establishments Act, 2013, and Section 5 read with Section 23 of the Banning of Unregulated Deposit Schemes Act, 2019.
The petitioners were arrested on 7 April 2025 and remanded the next day. They remained in custody for more than 155 days under the PMLA, in addition to earlier custody of 110 days under predicate offences. Counsel for the petitioners argued that their continued detention violated the right to life and liberty under Article 21 of the Constitution, as they were senior citizens with health issues and no flight risk. They contended that the companies’ financial difficulties arose during the Covid-19 pandemic and there was no dishonest intention from inception. It was also submitted that immovable properties worth ₹19.60 crores had already been attached by the authorities.
The Enforcement Directorate opposed bail, asserting that the petitioners had dishonestly collected investments, including from non-resident Indians, maintained parallel records, diverted funds, and transferred assets to family members to avoid detection. It was further contended that offences under PMLA were clearly made out, warranting continued custody.
The Court noted that “there is prima facie nothing to indicate any dishonest intention” and that “considering the nature of allegations in the various F.I.R’s registered and the final reports filed, it is doubtful as to whether the petitioners, being the Chairman and Managing Director, can be found guilty for the offence under section 420 IPC.”
It was observed that the total number of depositors across all companies was about 464, which fell within the permissible shareholder limit after 2013 under the Companies Act, 2013. The Court stated: “Since the allegations revolve around the investments or deposits collected from persons beyond the limits permissible under law, it may amount to violation of section 2(68) and section 73 of the Companies Act 2013 or other provisions under the said Act. Merely because there is a violation of the provisions of the Companies Act 2013, that need not necessarily mean that such a violation would fall within the purview of section 420 of IPC, unless there was any dishonest intention from the very inception.”
The Court referred to Supreme Court precedents, recording: “A business failure cannot lead to an assumption of commission of the offence of cheating, as the primary ingredient for such an offence is a dishonest or fraudulent intention from the very beginning.” Citing VESA Holdings (P) Ltd. v. State of Kerala, it further noted: “Even in a case where allegations are made in regard to failure on the part of an accused to keep his promise, if there was an absence of culpable intention at the time of making the initial promise, no offence under section 420 IPC will be made out.”
On the PMLA context, the Court stated: “Failure to return the money collected or the deposit taken, cannot amount to the offence of cheating. However, the said failure may amount to an offence under the BUDS Act, after 2019. Even if an offence under the BUDS Act is made out, since it is not a scheduled offence, the PMLA Act will not apply.”
The Court considered the prolonged custody undergone by the petitioners, noting that they had spent about 265 days in total. Referring to Supreme Court judgments in P. Chidambaram v. Directorate of Enforcement, V. Senthil Balaji v. Deputy Director, Directorate of Enforcement, and Udhaw Singh v. Enforcement Directorate, the Court recorded: “Detaining the accused for a long time, especially when the period of punishment prescribed is limited, is an intrusion into the liberty of an individual. In the above circumstances, continuing the incarceration will amount to be an instrument in the hands of ED to confine the petitioners in jail for a long time without any possibility of a trial.”
The Court ordered: “Accordingly these two bail applications are allowed and petitioners shall be enlarged on bail on the following conditions.” The Court specified that each petitioner shall execute a bond of Rs.50,000 with two solvent sureties each for the like sum to the satisfaction of the jurisdictional court.
“Petitioners shall appear before the Investigating Officer as and when required. Petitioners shall not intimidate or attempt to influence the witnesses; nor shall he tamper with the evidence or contact the victim or his/her family members. Petitioners shall not commit any similar offences while he is on bail. Petitioners shall not leave India without the permission of the Court having jurisdiction.”
The Court clarified that in case of violation of these conditions or if modification is required, the jurisdictional Court shall be empowered to pass appropriate orders notwithstanding the grant of bail by the High Court.
Advocates Representing the Parties
For the Petitioners: Sri. K. Anand, Smt. Gowri Menon, Smt. Nandhana T.B., Smt. Archana N., Shri. Anoop V. Nair, Sri. Rahul Sasi, Smt. Neethu Prem, Smt. Radhika V.R., Shri. Christo Simon
For the Respondents: Sri. Prasanth M.P., Public Prosecutor; Sri. Noushad K.A., Public Prosecutor; Sri. A.R.L. Sundaresan, Additional Solicitor General of India; Sri. Jaishankar V. Nair, Standing Counsel, Enforcement Directorate; Sri. K. Anand, Central Government Counsel
Case Title: M.C. Kamarudheen v. State of Kerala & Anr. and T.K. Pookoya Thangal v. State of Kerala & Anr.
Neutral Citation: 2025: KER:66625
Case Number: Bail Application Nos. 6063 & 6634 of 2025
Bench: Justice Bechu Kurian Thomas
