Accusations of fraudulent loan sanctions and potential witness intimidation lead to rejection of bail under PMLA
In a significant ruling, the Calcutta High Court, Circuit Bench at Port Blair, has denied bail to Kuldeep Rai Sharma, a Member of Parliament and former Vice Chairman of the Andaman and Nicobar State Cooperative Bank, implicated in a major money laundering case. The judgment, delivered by Justice Apurba Sinha Ray on February 10, 2026, emphasized the seriousness of the allegations under the Prevention of Money Laundering Act (PMLA), 2002, and the potential risk of influencing witnesses.
The Directorate of Enforcement (ED) accused Sharma of using his political and official position to fraudulently sanction loans amounting to INR 11.60 Crores. These loans were allegedly sanctioned to shell companies with dummy directors, orchestrated by Sharma and his associates. The court noted that evidence collected, including statements under Section 50 of the PMLA Act, suggested Sharma received substantial sums through these entities.
Despite Sharma's defense claiming false implication due to political reasons, and challenging the absence of direct evidence linking him to financial misconduct, the court found corroborative evidence supporting the ED's allegations. Witness statements, bank records, and other materials demonstrated Sharma's involvement in sanctioning loans and receiving funds.
Sharma's bail plea, which highlighted his medical conditions—Hypertension, Hyperthyroidism, and Severe Obstructive Sleep Apnoea—failed to convince the court of life-threatening circumstances warranting bail. The court compared his situation to a co-accused, Mr. K. Murugan, who was granted bail solely due to severe medical issues, including kidney failure.
The judgment underscored the statutory requirements under Section 45 of the PMLA Act, stressing that bail cannot be granted unless the accused can prove innocence or absence of guilt. The court observed that Sharma's 204-day judicial custody was not excessively long, given the gravity of the offense and the potential for witness intimidation.
Legal representatives for Sharma argued the delayed trial due to extensive evidence and numerous witnesses, but the court maintained the integrity of the investigation, noting the possibility of influencing and intimidating witnesses as a significant concern.
The rejection of Sharma's bail plea highlights the judiciary's commitment to upholding stringent measures under the PMLA Act, ensuring that economic offenses involving misuse of political power and financial institutions are thoroughly investigated and prosecuted.
Bottom Line:
Bail under PMLA Act cannot be granted if the accused fails to establish that they are not guilty of the alleged offence, and there is a possibility of influencing witnesses or interfering with the investigation.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Section 45; Indian Penal Code Sections 406, 409, 420, 467, 468, 471, 228; SARFAESI Act.
