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Synopsis

The Delhi High Court, recently, granted bail to Arun Muthu who was arrested for assisting Sukash/Sukesh Chandrashekhar and Leena Paulose. The bench of Justice Amit Sharma held “The trial in the present complaint as noted hereinbefore, is yet to commence and would take time to conclude. Apart from expressing apprehension of the applicant being a flight risk, no material has been shown to demonstrate the same”. 

A petition was filed by Arun Muthu seeking regular bail. Per investigation, Arun facilitated the receipt of crime proceeds in Chennai through hawala operators and ensured their integration into formal financial channels. He arranged for cash deposits via accommodation entry providers and routed funds through his personal and company accounts to legitimize the transactions. Additionally, he lent his name to assets and various financial dealings.

It was further contended that Muthy ensured that cash proceeds of crime were transferred to the accounts of Nail Artistry by swiping credit cards at a lower commission than B. Mohanraj, resulting in inflated sales credited to the business. He admitted that he was sent to Dubai to evade law enforcement actions in Chennai and to prevent the disclosure of transactional details, demonstrating his crucial role in money laundering activities. Furthermore, he acted as Leena Paulose’s business partner and engaged in receiving and distributing crime proceeds.

Arun Muthu, represented by Advocate Naveen Malhotra, argued that an offence under Section 3 of the PMLA required proof of mens rea, which he lacked. It was submitted that Muthu neither earned nor acquired proceeds of crime illegally. 
Muthu, a filmmaker in his twenties, had directed a web series with co-accused Leena Paulose, from which he retained only his commission while the majority of earnings were remitted to her. It was further contended that he received no money from co-accused Sukash Chandrasekhar or Leena Paulose. The applicant has been in custody since January 21, 2021, and despite four supplementary complaints, the trial has not yet commenced. 

Special Counsel Manish Jain for ED opposed the bail application, arguing that Muthu failed to meet the mandatory requirement under Section 45 of the PMLA. Muthu was linked to proceeds of crime exceeding Rs. 200 crores and actively participated in money laundering under Section 3 of the PMLA. Statements from co-accused and witnesses confirmed his involvement in financial transactions benefiting Sukash Chandrasekhar. Evidence showed that he collected and deposited cash, facilitated payments, and engaged in fraudulent business activities.  

The court observed that the trial for the scheduled offence had not commenced, and charges had not been framed. The complaint remained at the stage of charge consideration, with 300 prosecution witnesses cited.

Relying on the Supreme Court judgment in Manish Sisodia v. Enforcement Directorate, the court emphasized that if a trial was unlikely to conclude within a reasonable period, bail could be granted under Part III of the Constitution. The applicant had been in custody since October 21, 2021, for approximately three years and four months. 

The court observed that the trial had not commenced, and there was no material to suggest that the applicant posed a threat to society. His prolonged incarceration, coupled with an indefinite trial timeline, could not be overlooked, especially when weighed against the right to liberty and a speedy trial under Article 21 of the Constitution.

“The present applicant who is accused in a case of money-laundering cannot be considered to be a threat to the society without any material to demonstrate the same. The continued incarceration of the applicant with no possibility of trial being completed in near future, cannot be ignored and in case of conflict with a restrictive statutory provision like Section 45 of PMLA, the latter would not come in way ensuring the right to liberty and speedy trial under Article 21 of the Constitution of India”, the court outlined. 

The court noted that other than concerns about flight risk, no concrete material was presented to justify continued detention. 
Considering the overall facts and circumstances, the bail application was allowed. Muthu was granted bail upon furnishing a personal bond of Rs. 1,00,000 with one surety of a similar amount, subject to conditions including informing the trial court of any address change, seeking permission before leaving the country, keeping his mobile numbers operational, refraining from tampering with evidence or influencing witnesses, and cooperating with the investigation.

For Applicant: Advocates Naveen Malhotra and Ritvik Malhotra
For Respondents: Special Counsel Manish Jain with Advocates Sougata Ganguly, Snehal Sharda and Gulnaz Khan
Case Title: Arun Muthu v ED (2025:DHC:1081)