No scheduled offence, no proceeds of crime: Gauhati High Court grants PMLA bail in an IPL betting case

An Enforcement Directorate case under the Prevention of Money-Laundering Act, 2002 looks like a story about money: crores moving through a coke firm, a petroleum trader, a few LLPs. The Gauhati High Court's order of 2 November 2026 in Deepesh Bajoria reads it differently. Before asking where the money went, it asked where the money came from, and whether any crime listed in the PMLA Schedule had produced it. The answer, on the record as it stood, was no. That one finding carried the bail application through Section 45.

The money trail, and the paper trail underneath it

Mr. Bajoria was arrested by the ED on 19 September 2026 under Section 19(1). The ECIR dated 30 March 2023 rested on a Guwahati Crime Branch FIR of October 2021, which alleged IPL betting through WhatsApp, Telegram and betting websites. That FIR, Crime Branch P.S. Case No. 12/2021, invoked Sections 120-B and 420 IPC with Sections 13 and 14 of the Assam Game and Betting Act, 1970.

The police chargesheet of May 2024 named him along with four others. Its heading carried the IPC sections, but its substantive conclusion mentioned only the Assam Act. The Kamrup (M) magistrate took cognizance on 5 November 2024 under Sections 13 and 14 of that Act alone, and no charge was framed. The ED then added three more FIRs to the ECIR by addenda: two from Tinsukia (cheating and conspiracy cases) and a 2026 Panbazar FIR against another accused, Alok Jain. He was named in none of them.

Why the chain breaks at its first link

The PMLA never punishes wealth as such. It builds a closed loop of three definitions. Section 2(1)(y) says which crimes are "scheduled offences". Section 2(1)(u) says that "proceeds of crime" means property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. Section 3 then punishes any process or activity connected with those proceeds. Remove the first link and the other two have nothing to attach to. See the notes on the PMLA definitions.

The Court put it in those terms. Citing Vijay Madanlal Choudhary v. Union of India, it held that although money-laundering is an independent offence, it still needs proceeds of crime derived from a scheduled offence. A scheduled offence is a sine qua non, and where none exists there can be no proceeding for money-laundering. Sections 13 and 14 of the Assam Game and Betting Act are not in the Schedule. The only proceeding that had reached cognizance in the original case therefore supplied no predicate.

So bank credits of about Rs. 28 crore in M/s DRM Coke, transfers of Rs. 5.5 crore from a petroleum firm, and statements about "investments" in betting were, the Court said, irrelevant to proceeds of crime. Nothing tied that money to a scheduled offence. Unexplained money is not the same as tainted money.

"But the other three FIRs are alive"

The ED's strongest reply was that money-laundering stands on its own and that the accused need not be named in the predicate FIR. The Court accepted the law, quoting Vijay Madanlal for the point that the sweep of the Act reaches any person involved in a process connected with proceeds, whether or not accused in the scheduled offence. That is a real doctrine: the offence of money-laundering speaks of "whosoever", not "the accused in the FIR".

The question then moved from law to proof. The Court went through each live FIR:

Two points stand out. Being a co-accused elsewhere, or knowing a bookie, is not a link to proceeds: the ED needs property, a predicate crime that generated it, and the person's handling of it. And the Court did not call the live FIRs harmless; it said no proceeds from any of them were shown to reach this applicant. That is a bail-stage view, built to stay narrow.

Statements the ED relied on, and why they carried so little

Much of the ED's material was oral: the applicant's own Section 50 statement, Alok Jain's statements, and statements of two businessmen and a club partner. The Court sorted them by whose mouth and under what custody.

The applicant's own statement. He said, on 20 September 2026, that he had collected cash bets and kept 10% of the losing amount. He had been arrested the previous day. The Court applied Prem Prakash v. Union of India, which held that a Section 50 statement made by a person in custody under the PMLA, whatever the case behind the custody, is inadmissible against the maker. The reason given there was that such a person is not "operating with a free mind". The Court tied this to Article 20(3) and Section 23 of the BSA, 2023 (earlier Sections 25 and 26 of the Evidence Act); see the notes on confessions.

The co-accused's statements. The Court treated these under the old Section 30 Evidence Act rule, now Section 24 BSA, applied in Prem Prakash through Kashmira Singh v. State of Madhya Pradesh. A co-accused's confession is corroboration at best. The agency must gather independent evidence first, and only then may it use the statement to lend assurance. It cannot start its case on it. Alok Jain was in judicial custody or ED custody each time, and on several dates he said nothing about the applicant at all.

The businessmen's statements about money put into DRM Coke and betting were held irrelevant on proceeds, for the same missing-predicate reason.

Section 45 on the facts: the twin conditions, applied

The Court did not soften Section 45. It quoted Vijay Madanlal and Union of India v. Kanhaiya Prasad for the proposition that the twin conditions apply without exception, whatever form the bail plea takes. The conditions are cumulative. First, the Public Prosecutor must have had an opportunity to oppose. Second, the Court must be satisfied that there are reasonable grounds for believing the accused is not guilty of the PMLA offence, and that he is not likely to commit any offence while on bail. The twin conditions chapter calls the first a threshold higher than the ordinary prima facie test.

What the judgment shows is how they work in practice when the predicate falls away. The first limb, belief in non-guilt of "such offence", was met because the offence under Sections 3 and 4 PMLA could not be made out without proceeds of crime, and none was shown. The second limb was met because "nothing adverse" was on record. The Court also quoted Prem Prakash on Article 21: Section 45 does not turn the rule on its head, and "liberty of the individual is always a Rule". The twin conditions must be satisfied, but they are not a presumption that jail is the norm. The same idea is explained in the notes on Article 21 and bail and bonds.

Bail came on a Rs. 5 lakh bond with two sureties: appear when required, surrender the passport, cooperate with the ED, and no tampering or influencing of witnesses. The application was under Section 483 BNSS (earlier Section 439 CrPC) with Sections 45 and 65 PMLA, and the Court added that nothing in the order prejudices either side at trial.

Where the judgment leaves questions open

An aspirant writing a mains answer should note what the order does not settle:

• The IPC sections in the chargesheet heading. Sections 120-B and 420 IPC are in Part A of the Schedule, and the notes record that cheating and conspiracy can supply a predicate. The ED argued that no charge had been framed and no discharge ordered on them. The Court preferred the cognizance order and the substantive part of the chargesheet. How a heading, a conclusion and a cognizance order are to be weighed is the kind of point a trial court or a higher court may revisit.
• Conspiracy as a bridge. Applicant's counsel relied on Pavana Dibbur v. Directorate of Enforcement, where the Supreme Court held that Section 120-B becomes a scheduled offence only when the conspiracy is to commit a scheduled offence.

Treat the order as a bail-stage finding on the material produced, and a reminder of order of proof: predicate first, proceeds second, person third.

Three questions to test the chain