Fashion Gold Scam: Kerala High Court Grants Bail To Ex-MLA Kamarudheen, Another Accused Of Siphoning Over ₹20 Crore

The Kerala High Court on Tuesday (September 9) granted regular bail to former MLA M.C. Kamarudheen and his business associate T.K. Pookoya Thangal in a PMLA case where they are accused of siphoning over Rs. 20 Crores of investor's money allegedly siphoned to four companies. 

Kamarudheen and Thangal are stated to be the Chairman and Managing Director respectively of four accused companies–Fashion Gold International, Fashion Ornaments Pvt. Ltd., Qamar Fashion Gold Pvt. Ltd., and Nujum Gold Pvt. Ltd.

Justice Bechu Kurian Thomas observed:

"In the instant cases, there is no possibility of trial against the petitioners being commenced or completed in the next few years. Other than the large number of predicate crimes registered, no antecedents have been shown to be existing against the petitioners. Detaining the accused for a long time, especially when the period of punishment provided is limited is an intrusion into the liberty of an individual. The circumstances continuing the incarceration will amount to an instrument in the hands of the ED to allow the petitioners to remain in jail for a long time without any possibility of a trial. Having regard to the above circumstances, this Court is of the view that the continued custody of the petitioners is not warranted. Accordingly, these two bail applications are allowed."

A detailed order is awaited.

The Court noted that there are no reasons to assume that the petitioners are guilty of the offence under Section 420 IPC and consequently, for the offence under the PMLA Act. It also reiterated that unless there was fraudulent intention from the very beginning, mere breach of the contractual term would amount to cheating.  

The Court further remarked that failure to return the money collected or the deposited taken cannot amount to the offence of cheating though it may amount to an offence under the BUDS Act [The Banning of Unregulated Deposit Schemes Act] after 2019.

"Even if an offence under the BUDS Act is made out, since it is not a scheduled offence, the PMLA Act would not apply. In this context, this Court reminds itself that the term "proceeds of crime" relates to property derived or obtained as a result of a criminal activity relating to a Scheduled offence. Therefore, I am satisfied that, prima facie, there are no materials to assume that the petitioners have committed the offence under the PMLA Act," the Court observed.

It also took note of the fact that the petitioners have been in custody for 155 days since their arrest on 07.04.2025 for the offence under the PMLA Act.  Moreover, taking into consideration the further 110 days of incarceration during the investigation stage in the predicate offence, the total period of custody was around 265 days pursuant to the FIR and the arrest under the PMLA. 

The bail applications were preferred following the registration of a case alleging offence under Section 3 of the Prevention of Money Laundering Act (PMLA) against the accused individuals and companies. As per the provision, to make out an offence under it, three ingredients have to be satisfied. One of the ingredients is the commission of any of the predicate offences mentioned in the Schedule of the PMLA.

The prosecution allegation was that the two accused persons siphoned off more than Rupees 20 crores of investor money, which was invested in the accused companies. It was alleged that the petitioners had committed offences including that under Section 420 [Cheating and dishonestly inducing delivery of property] of the Indian Penal Code. 168 FIRs were registered by the Police based on complaints and chargesheet had been filed in six of the cases.

The Enforcement Directorate (ED), thereafter, investigated the cases and looked at the trail of money transactions conducted by the accused companies. ED stated that as per its investigation, the money was transferred into the personal accounts of the accused individuals without returning the money to the investors. It was alleged that thereupon, this money was used to purchase properties, which was later sold at a profit. It was alleged that this profits were pocketed by the accused individuals illegally and by cheating the investors, thereby committing the predicate offence of cheating.

The ED alleged that three ingredients for satisfying the offences of Section 3 PMLA was made out in the present case.

Crime No.ECIR/KZSZO/06/2020 was registered by the Enforcement Directorate, Kozhikode arraying Kamarudheen and Pookoya Thangal as accused nos. 5 and 6.

Case No: Bail Appl. No. 6063/2025 and connected case

Case Title: M.C. Kamarudheen v. State of Kerala and connected case

Citation: 2025 LiveLaw (Ker) 548

Counsel for the petitioners: Anoop V. Nair

Counsel for the respondents: AR. L. Sundaresan, ASGI 

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