Bail Survives, Precedent Does Not: Supreme Court’s Cautionary Order in the Jaffer Sadiq PMLA Case

On 2 September 2026, the Supreme Court declined to interfere with the Madras High Court’s decision granting bail to Jaffer Sadiq and Mohamed Saleem in a prosecution under the Prevention of Money Laundering Act, 2002. The result, however, cannot accurately be described as an endorsement of the High Court’s reasoning. In The Assistant Director v. Jaffer Sadiq Etc., SLP (Crl.) Nos. 18736–18737 of 2025, the Supreme Court expressly recorded a prima facie reservation about the impugned order, allowed the bail arrangement to continue because it had operated for more than a year, and directed that its decision “shall not be treated as a precedent.”

That combination makes the order legally significant for a reason different from an ordinary affirmation of bail. It illustrates the distinction between refusing discretionary interference under Article 136 of the Constitution and declaring binding law under Article 141. It also shows why a subsisting bail order may remain effective between the parties even when the Supreme Court is unwilling to approve the reasoning on which it was granted.

The proceedings before the Madras High Court

The underlying common order was delivered by Justice Sunder Mohan on 21 April 2025 in Jaffer Sadiq v. Assistant Director, Directorate of Enforcement, Crl.O.P. Nos. 3508 and 3510 of 2025. The petitions were applications for bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 in Special C.C. No. 17 of 2024.

The Enforcement Directorate had registered ECIR No. 09 of 2024 on 11 March 2024. According to the prosecution case recorded in paragraphs 1–3 of the High Court order, the scheduled-offence material arose from separate narcotics cases registered by the Narcotics Control Bureau and customs authorities concerning alleged exports or trafficking of pseudoephedrine and ketamine. The ED alleged that the accused dealt with proceeds of crime through cash deposits, investments, unsecured loans said to be accommodation entries, and purchases of movable and immovable assets. A prosecution complaint was filed on 18 October 2024 for the offence defined by Section 3 and punishable under Section 4 of the PMLA.

Jaffer Sadiq had been arrested by the ED on 26 June 2024 while in custody in a scheduled-offence case and was remanded in the PMLA matter on 15 July 2024. Mohamed Saleem surrendered on 12 August 2024 and was remanded the following day. By the time the High Court considered bail, the ED had cited 19 witnesses and relied on 190 documents; the complaint concerned 20 accused persons, and service of summons on some accused remained incomplete.

What the parties argued

The accused advanced several distinct grounds. These included an alleged failure to satisfy Section 19 of the PMLA, the claimed inadmissibility of a Section 50 statement recorded while Sadiq was in custody in the scheduled offence, an alleged violation of Article 22(2) arising from the time taken to produce him before the competent court, the attachment of the identified properties, completion of investigation and the improbability of an early trial.

The ED opposed bail on both merits and statutory grounds. It argued that bail in a scheduled offence is not equivalent to acquittal or discharge; that a person need not be an accused in the scheduled offence to be prosecuted for knowingly dealing with proceeds of crime; that substantial unexplained cash and accommodation entries linked the accused to alleged proceeds; and that the High Court was required to apply the twin conditions in Section 45 of the PMLA. It also relied on Section 479 BNSS, the successor provision governing release of an undertrial after detention for a specified fraction of the maximum sentence, to contend that the custody period had not crossed the statutory threshold.

The High Court deliberately did not decide every contested issue

The structure of the High Court’s reasoning is crucial. Paragraph 9 noted the argument that Sadiq remained in custody for nearly four days after a release warrant in the scheduled-offence case and referred to the later Supreme Court ruling in Directorate of Enforcement v. Subhash Sharma on production within 24 hours. But paragraph 10 expressly said it was unnecessary to decide the other submissions concerning reasonable grounds of innocence and the legality of arrest and remand. The High Court granted bail on the separate constitutional ground of prolonged pre-trial detention and the absence of a realistic prospect of early completion.

It would therefore be inaccurate to cite the High Court order as a conclusive adjudication that the arrest was illegal, that the Section 50 statement was inadmissible, that the alleged assets were not proceeds of crime, or that the accused had independently satisfied Section 45 on the merits. Those were arguments before the Court; they were not the ratio on which bail was granted.

Article 21 and the Section 45 twin conditions

The High Court’s controlling reasoning appears in paragraphs 10–21. It relied principally on Manish Sisodia v. Directorate of Enforcement, 2024 INSC 595, in which the Supreme Court reaffirmed that speedy trial and personal liberty are sacrosanct, that bail cannot be withheld as punishment, and that prolonged incarceration combined with an unlikely early trial is relevant even in a PMLA prosecution.

The High Court also addressed the apparent tension between Union of India v. Kanhaiya Prasad, 2025 INSC 210, where bail was cancelled because the High Court had not considered Section 45, and Udhaw Singh v. Enforcement Directorate, 2025 INSC 247. In Udhaw Singh, the Supreme Court clarified that Kanhaiya Prasad did not depart from Union of India v. K.A. Najeeb, (2021) 3 SCC 713, or V. Senthil Balaji v. Deputy Director, Directorate of Enforcement, 2024 INSC 739. Kanhaiya Prasad concerned custody of less than seven months and contained no finding that trial could not conclude within a reasonable time. Constitutional relief for oppressive delay therefore remained available on an appropriate factual record.

Applying that line of authority, the High Court found that the alleged properties had been attached, investigation had culminated in a complaint, some accused had yet to be served, and the case involved 20 accused, 19 witnesses and voluminous documentary material. The prosecution’s submission that investigations involving foreign jurisdictions were continuing reinforced the conclusion that trial was unlikely to end soon. The Court further observed that the accused had remained at large for years before their 2024 arrests and that the prosecution could seek cancellation if they attempted to influence witnesses.

Paragraph 20 stated the governing constitutional principle: where prolonged pre-trial detention infringes Article 21, the rigour of a statutory restriction on bail may be diluted. The Court correctly treated that inquiry as fact-sensitive. Relevant considerations included the custody already undergone, the accused’s role, the nature of the evidence, the maximum punishment and the realistic prospect of concluding trial.

The conditions imposed by the High Court

The High Court ordered each accused to execute a bond of ₹5 lakh with two sureties for the same amount. It required surrender of passports, regular appearance before the trial court, non-contact with witnesses, non-interference with evidence and disclosure of mobile numbers. It also preserved the ED’s right to seek cancellation of bail for unjustified absence or breach of conditions. The order referred to Section 269 of the Bharatiya Nyaya Sanhita, 2023 in relation to failure to appear after release on bail or bond.

What the Supreme Court decided in 2026

The ED challenged the common bail order through SLP (Crl.) Nos. 18736–18737 of 2025. On 2 September 2026, a Bench comprising Justices M.M. Sundresh and Augustine George Masih heard the Additional Solicitor General and senior counsel for the respondents.

The operative order is short and carefully qualified. The Supreme Court recorded that, on a prima facie view, it had its “own reservation” about the impugned order. It nevertheless declined interference because the High Court order had been passed more than a year earlier. It then dismissed the special leave petitions and expressly directed that the decision would not be treated as a precedent.

The bail therefore survived, but not because the Supreme Court affirmed every proposition in the High Court order. The decisive consideration stated by the Supreme Court was the passage of time since bail was granted. The order neither converted the High Court’s reasoning into Supreme Court law nor supplied a generally applicable formula for bypassing Section 45.

Why dismissal of the SLP is not an affirmation on merits

Article 136 gives the Supreme Court a discretionary jurisdiction to grant special leave to appeal. At the leave stage, a refusal to interfere is not the same as exercising appellate jurisdiction after granting leave. The established doctrine in Kunhayammed v. State of Kerala, (2000) 6 SCC 359, is that an order refusing special leave does not attract merger. A non-speaking refusal does not declare law under Article 141; where reasons are stated while refusing leave, any actual declaration of law must be identified with precision rather than treating the entire lower-court judgment as affirmed.

Here, the Supreme Court eliminated any possible ambiguity by saying that its decision was not to be treated as a precedent. Consequently, three propositions must be kept separate:

First, the High Court’s bail order continues to govern the parties because the Supreme Court did not set it aside.

Second, the dismissal does not establish that the High Court correctly applied Section 45, Article 21 or the cited authorities in every respect.

Third, the Supreme Court’s express reservation is not itself a reasoned ruling identifying which part of the High Court analysis was considered doubtful. It would be speculative to attribute the reservation to any particular paragraph or submission.

Effect on future PMLA bail applications

Future applicants cannot rely on the 2 September 2026 dismissal as a precedent for bail. They must establish their own case under Section 45 or demonstrate, through case-specific facts, that continued incarceration and the projected trial timeline engage Article 21 under the governing Supreme Court authorities.

Courts should examine actual custody, the sentence exposure, stage of cognisance and charge, number of accused and witnesses, volume of documents, responsibility for delay, risk of flight or interference, and whether conditions can adequately secure the trial. A bare assertion that a financial prosecution is document-heavy is insufficient; equally, the seriousness of an allegation cannot by itself justify detention of indefinite duration while trial remains remote.

The distinction between statutory and constitutional routes also matters. Section 479 BNSS prescribes an undertrial-release threshold, subject to its text and exceptions. It does not exhaust the constitutional court’s power to protect liberty before that mathematical threshold where the particular detention has become unreasonable. Udhaw Singh and the cases it preserves show that Article 21 review remains fact-dependent rather than mechanically postponed until a fixed fraction of the maximum sentence has elapsed.

The correct reading of the outcome

The Jaffer Sadiq litigation does not produce a new binding rule weakening Section 45 of the PMLA. Nor did the Supreme Court cancel bail. The legally accurate account lies between those extremes: it left a year-old bail order undisturbed for pragmatic, case-specific reasons, expressly withheld precedential effect, and recorded a prima facie reservation without identifying or deciding the disputed point.

For practitioners, the case is a reminder to read the disposition and procedural posture before citing a headline. A successful respondent in an SLP may retain the benefit of the order below without obtaining the Supreme Court’s endorsement of its reasoning. Conversely, an investigative agency’s unsuccessful challenge does not necessarily settle the legal issue against it. Binding guidance must still be drawn from reasoned Supreme Court decisions such as Manish Sisodia, V. Senthil Balaji, Udhaw Singh, Kanhaiya Prasad and K.A. Najeeb, applied to a properly developed factual record.

Sources

The Assistant Director v. Jaffer Sadiq Etc., SLP (Crl.) Nos. 18736–18737 of 2025, Supreme Court order dated 2 September 2026: https://www.sci.gov.in/view-pdf/?diary_no=577382025&type=o&order_date=2026-09-02&from=latest_judgements_order

Jaffer Sadiq v. Assistant Director, Directorate of Enforcement, Crl.O.P. Nos. 3508 and 3510 of 2025, Madras High Court common order dated 21 April 2025, especially paragraphs 1–22: https://www.mhc.tn.gov.in/judis

Manish Sisodia v. Directorate of Enforcement, 2024 INSC 595, especially paragraphs 50–53: https://api.sci.gov.in/supremecourt/2024/29266/29266_2024_3_1501_54588_Judgement_09-Aug-2024.pdf

Union of India v. Kanhaiya Prasad, 2025 INSC 210: https://api.sci.gov.in/supremecourt/2024/22780/22780_2024_9_1501_59321_Judgement_13-Feb-2025.pdf

Udhaw Singh v. Enforcement Directorate, 2025 INSC 247: https://api.sci.gov.in/supremecourt/2024/56374/56374_2024_4_6_59497_Judgement_17-Feb-2025.pdf

Kunhayammed v. State of Kerala, (2000) 6 SCC 359, as restated by the Supreme Court in Khoday Distilleries Ltd. and subsequent decisions concerning dismissal of special leave petitions and the doctrine of merger.

Prevention of Money Laundering Act, 2002, particularly Sections 3, 4, 19, 45 and 50: https://www.indiacode.nic.in/

Bharatiya Nagarik Suraksha Sanhita, 2023, particularly Sections 479 and 483; Bharatiya Nyaya Sanhita, 2023, Section 269: https://www.indiacode.nic.in/

This article is intended for general legal information and does not constitute advice concerning any pending investigation, prosecution or bail proceeding.

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