Kanhaiya Prasad was first arrested by the Enforcement Directorate (ED) in September 2023. In May 2024, the Patna High Court granted him bail, citing constitutional principles such as the right to speedy trial.
The ruling was short-lived. On February 12, 2025, a Supreme Court bench comprising Justices Bela M. Trivedi and Prasanna B. Varale vacated the High Court’s bail order, holding that the High Court had failed to adequately apply the rigorous twin-condition test under Section 45 of the PMLA, which mandates satisfying both innocence and non-flight risk before bail can be granted.
Just days later, on February 17, 2025, the Supreme Court bench hearing Udhaw Singh v. ED applied liberal bail principles, drawing upon precedents such as V. Senthil Balaji and K.A. Najeeb, which emphasize that prolonged incarceration without trial. The Bench also noted that the February 12 order had not considered the precedents in the case of Kanhaiya Prasad.
The latest bail order, issued on August 22, 2025, reflects the High Court fully incorporating those precedents. The court meticulously addressed the Supreme Court’s findings and observations from V. Senthil Balaji and K.A. Najeeb, which were cited before the coordinate bench at the ED's request.
The bench noted that the case against Prasad hinges mainly on "conjectures and surmises." There is no documentary proof tying him to proceeds of crime or showing any nexus between him, his father, and the mining business. The prosecution’s claims regarding a so-called “syndicate” rely exclusively on uncorroborated Section 50 statements of co-accused, deemed insufficient for establishing culpability.
Having already spent nearly 15 months in custody, with no trial commenced or charges framed, the court held that the ongoing detention undermines Prasad’s fundamental right to a speedy trial – a principle repeatedly upheld in Supreme Court rulings.
In a related judgment from May 2025, the High Court quashed most of the predicate FIRs filed against sand-mining companies, reasoning that these entities could not have carried out theft as they weren’t in possession of mining ghats at the material time. The High Court further hinted at administrative laxity, noting that the mining department itself may bear responsibility for any theft. That ruling critically undermines the foundation of the ED’s laundering case.
Consequently, bail was granted with a bond of ₹ 10 lakh and standard conditions including surrender of passport, travel restrictions, and other supervisory measures.
The ED's case encompasses 12 individuals. Presently, nine are on bail, and in one instance, the Patna High Court found the ED’s arrest as illegal. Several of the predicate FIRs critical to the money-laundering charge have now been quashed, making it increasingly difficult to prosecute effectively. Though two accused remain in custody pending bail hearings, this wave of court orders signals growing judicial skepticism of the prosecution’s strategy.
This ruling illustrates a broader judicial pushback against the perceived overreach of PMLA provisions, particularly the draconian dictates of Section 45. While the PMLA was enacted to curb economic crimes, its stringent bail thresholds have often resulted in prolonged incarceration without trial – a scenario decried as "process as punishment" by critics.
Decisions in V. Senthil Balaji, K.A. Najeeb, and Manish Sisodia have carved out exceptions – granting bail when the procedural delay is unjustifiable and the case’s material weakness is evident. The latest bail order reinforces that constitutional protections under Article 21 must temper statutory draconianness, especially when trial pendency extends indefinitely.
The Patna High Court’s August 22 bail order for Kanhaiya Prasad marks not just a personal reprieve but a significant pivot in PMLA jurisprudence. It underscores that even in serious economic offences, courts must balance statutory tough-on-crime mandates with constitutional liberties. The decision – and the corresponding relief extended to other accused – may well compel the ED to rethink its prosecutorial approach in long-drawn money-laundering cases, especially when evidence is tenuous and procedural timelines indefinite.
