The Himachal Pradesh High Court has clarified that financial transactions and call detail records, without corroborative evidence, cannot form the sole basis for denying bail in cases under the Narcotic Drugs and Psychotropic Substances Act. This ruling reinforces the principle that bail decisions must be grounded in prima facie evidence, not speculative inferences.
Background & Facts
The Dispute
The petitioners, Sachin Kumar and Sorabh, were arrested in connection with FIR No. 282 of 2025 registered at Police Station Sadar, Chamba, for alleged offences under Section 21 and 29 of the NDPS Act and Sections 221 and 132 of the Bhartiya Nyaya Sanhita. The prosecution alleged that the petitioners had transferred substantial sums - ₹57,260 and ₹22,750 respectively - to the bank accounts of Aryan Mahajan and Binta Mahajan, the main accused in a heroin trafficking case. Additionally, the police relied on call detail records showing frequent communication between the petitioners and the main accused.
Procedural History
- 22 November 2025: FIR registered after recovery of 20.65 grams of heroin, mobile phones, cash, and drug paraphernalia from the main accused’s residence.
- Arrest of petitioners: Based solely on financial transfers and call logs, with no physical evidence linking them to possession, sale, or distribution.
- Bail applications rejected: Lower courts denied bail, citing the nature of the offence and the financial links.
- Petitions filed: Both petitioners approached the High Court seeking regular bail.
Relief Sought
The petitioners sought release on bail, arguing that they are permanent residents of Chamba with deep societal roots, no criminal antecedents, and no evidence connecting them to the actual trafficking activity. They contended that the prosecution’s case rested entirely on circumstantial data insufficient to meet the threshold for denying bail under Section 37 of the NDPS Act.
The Legal Issue
The central question was whether financial transactions and call detail records, without any direct evidence of involvement in drug trafficking, constitute sufficient grounds to deny bail under Section 37 of the NDPS Act, particularly when Section 27A for financing is invoked.
Arguments Presented
For the Petitioner
Mr. Rajesh Verma argued that the prosecution had failed to establish a prima facie case against the petitioners. He relied on Amal E v. State of Kerala and Dinesh Kumar v. State of H.P. to assert that monetary transfers alone cannot prove involvement in drug trafficking. He emphasized that Section 27A requires active financial support for sustaining illicit operations, not mere purchase or payment for personal consumption. He further cited Tofan Singh v. State of Tamil Nadu to reject the use of co-accused disclosures against the petitioners.
For the Respondent
Mr. Lokender Kutlehira, Additional Advocate General, contended that the scale of transactions and frequency of communication indicated complicity in a drug network. He argued that the gravity of the offence under the NDPS Act warranted strict bail scrutiny and that the petitioners’ proximity to the main accused justified continued custody. He did not produce any independent evidence linking the petitioners to the actual trafficking or distribution.
The Court's Analysis
The Court undertook a rigorous analysis of the legal standards for bail under Section 37 of the NDPS Act, referencing the Supreme Court’s jurisprudence in Pinki v. State of U.P., Prahlad Singh Bhati v. State (NCT of Delhi), and Brijmani Devi v. Pappu Kumar. It emphasized that bail cannot be denied merely on the basis of suspicion or indirect indicators.
"It is trite that this Court does not, normally, interfere with an order passed by the High Court granting or rejecting bail to the accused. However, it is equally incumbent upon the High Court to exercise its discretion judiciously, cautiously and strictly in compliance with the basic principles laid down in a plethora of decisions of this Court on the point."
The Court held that financial transactions are common in everyday commerce and do not, by themselves, establish financing under Section 27A. Citing the Bombay High Court’s interpretation in Rhea Chakraborty v. Union of India, it clarified that financing requires providing capital to sustain or operationalize illicit drug trade - not merely paying for a purchase. The Court observed:
"Simply providing money for a particular transaction or other transactions will not be financing of that activity. Financing will have to be interpreted to mean to provide funds for either making that particular activity operational or for sustaining it."
Similarly, the Court rejected the reliance on call detail records, citing its own precedents in Dinesh Kumar @ Billa v. State of H.P. and Saina Devi v. State of H.P., which held that CDRs alone cannot establish a prima facie case. The Court noted that the prosecution had no material evidence - no recovered contraband from the petitioners, no witness testimony, no confessional statements, and no forensic or surveillance data.
The Court concluded that the prosecution had not met the threshold of reasonable grounds to believe the petitioners committed the offence. The absence of any corroborative evidence rendered the case against them speculative, and thus, the denial of bail was unsustainable.
The Verdict
The petitioners won. The Court held that financial transactions and call detail records alone are insufficient to establish a prima facie case under Section 27A of the NDPS Act. The petitioners were granted bail subject to conditions including a bond of ₹1,00,000 with one surety, surrender of passports, and compliance with court summons via digital means.
What This Means For Similar Cases
Financial Transactions Do Not Equal Financing
- Practitioners must challenge bail denials based solely on bank transfers unless the prosecution proves the funds were used to sustain or enable a drug trafficking enterprise.
- Mere payment for drugs, even in large amounts, cannot be equated with financing under Section 27A.
- Argue for application of Rhea Chakraborty to distinguish between consumer purchase and operational financing.
Call Detail Records Are Not Probative Without Corroboration
- CDRs alone cannot satisfy the prima facie requirement under Section 37 of the NDPS Act.
- Courts must reject bail denials where CDRs are the only evidence, especially when co-accused statements are inadmissible under Tofan Singh.
- File successive bail applications where CDRs and disclosures are the sole basis for custody.
Burden of Proof Remains on the Prosecution
- The prosecution bears the burden to establish a genuine case - not a speculative one.
- Courts must avoid mechanical bail rejections in NDPS cases; each decision must reflect judicious application of mind as mandated by Brijmani Devi.
- Petitioners with stable residence, no prior record, and no flight risk are entitled to bail unless compelling evidence exists.
