The Kerala High Court has granted bail to former MLA M.C. Kamarudheen and his associate T.K. Pookoya Thangal, both of whom were accused in connection with the Fashion Gold investment scheme under the provisions of the Prevention of Money Laundering Act (PMLA). The two had been in judicial custody for over eight months before filing their applications seeking regular bail. They were office bearers of four companies—Fashion Gold International, Fashion Ornaments Pvt. Ltd., Qamar Fashion Gold Pvt. Ltd., and Nujum Gold Pvt. Ltd.—with Kamarudheen serving as Chairman and Pookoya Thangal as Managing Director. It was alleged that these companies had collected more than ₹20 crore from investors and misappropriated the funds.
Justice Bechu Kurian Thomas, while granting bail, observed that the trial in the case was unlikely to commence or conclude in the near future. He pointed out that there was no evidence of any criminal antecedents against the petitioners. The court stressed that keeping the accused in prolonged pre-trial detention when the trial is not progressing would amount to an infringement of their right to personal liberty. The judge warned that detention cannot be used as a tool of oppression, especially in situations where the conclusion of the trial remains uncertain and delayed.
The court also examined the legal aspects of the case, particularly the connection between the allegations and the offences under the PMLA. It noted that while there were allegations of cheating under Section 420 of the Indian Penal Code (IPC), the essential ingredients of the offence had to be carefully established. The court observed that unless fraudulent intention was proven at the time of entering into contracts or agreements, mere failure to return money or breach of contractual obligations could not be equated with cheating. It further pointed out that after 2019, such financial irregularities might fall under the Banning of Unregulated Deposit Schemes (BUDS) Act, but since the BUDS Act was not listed as a scheduled offence under the PMLA, its applicability in this case was questionable.
According to the Enforcement Directorate, the petitioners had transferred investor funds to their personal accounts and allegedly used the money for property transactions, thereby engaging in money laundering. The case was formally registered as ECIR/KZSZO/06/2020, with both Kamarudheen and Pookoya Thangal named as accused. The agency argued that the actions of the petitioners satisfied the threefold requirement for attracting provisions under the PMLA, including the existence of predicate offences. However, the High Court found that the prima facie material did not clearly establish offences that could bring the case within the ambit of the PMLA.
The court also raised an important question regarding whether shareholders, who were part of the companies involved, could claim to have been cheated. It pointed out that dividend payments to shareholders are not guaranteed and remain at the discretion of the company. Thus, failure to disburse dividends could not, in itself, constitute cheating under Section 420 IPC. This observation further weakened the prosecution’s argument that the actions of the petitioners amounted to offences under both the IPC and the PMLA.
After considering the submissions, the court concluded that further detention of the petitioners was not justified. It emphasized that constitutional safeguards against arbitrary and prolonged pre-trial imprisonment had to be respected. On this basis, the High Court ordered the release of both petitioners on regular bail.
The ruling highlighted the court’s concern over safeguarding the fundamental rights of the accused, especially in cases where prolonged custody is sought without adequate evidence to justify continued incarceration. The decision reflects the principle that the presumption of innocence and the right to personal liberty must remain central to the criminal justice process, even in cases involving financial scams and money laundering allegations.
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