Kerala High Court grants bail to two in Fashion Gold deposit case

What the Record Shows

The Kerala High Court granted bail to M.C. Kamarudheen, a former Member of the Legislative Assembly, and T.K. Pookoya Thangal on 9 September 2025 in the Enforcement Directorate's money-laundering case arising from the Fashion Gold jewellery investment matter, per the order of Justice Bechu Kurian Thomas in Bail Appl. Nos. 6063 and 6634 of 2025. The two, arrayed as accused 5 and 6, were released on a bond of Rs 50,000 each with two sureties, after more than 155 days in custody since their arrest on 7 April 2025.

The order is notable for what the court said in granting relief. Justice Bechu Kurian Thomas recorded that he was "satisfied that, prima facie, there are no materials to assume that the petitioners have committed the offence under the PMLA," and observed that "failure to return the money collected or the deposit taken, cannot amount to the offence of cheating" in the absence of a fraudulent intention from the inception. The court also noted that even if an offence under the Banning of Unregulated Deposit Schemes framework were made out, it is not a scheduled offence, so the money-laundering statute would not apply.

That observation is favourable to the accused, and it is a bail-stage view, not an acquittal. Both remain accused persons in a pending prosecution; the allegations are untested at trial, and a chargesheet is not a conviction.

How It Worked

The prosecution case, as summarised in the bail order, is that four companies built around the Fashion Gold jewellery chain, incorporated from 2006 onward, collected public deposits against promises of high returns and then failed to disburse what was promised. Per the order, roughly Rs 26 crore was collected, of which the Enforcement Directorate alleges about Rs 20 crore was siphoned away. The jewellery business collapsed in October 2019, and depositors, many of them small investors in the Kasaragod belt, were not repaid.

The matter reached the Enforcement Directorate through the state cases. Kerala Police, including the Crime Branch, registered a large number of cheating cases against the promoters under the Indian Penal Code and the state law protecting the interests of depositors in financial establishments, per the record. On that predicate, the Directorate opened a case under the Prevention of Money Laundering Act, 2002 and arrested the two on 7 April 2025.

At the bail stage the court engaged with whether that structure held together in law. Its reasoning, per the order, was that the criminal offence of cheating requires dishonest intention at the outset and is not established merely because a deposit-taker later fails to repay, and that money-laundering charges need a scheduled predicate offence to stand on. Finding the predicate weak at this stage, the court concluded there were prima facie no materials to assume the PMLA offence and granted bail. None of this decides the trial; it is the court's assessment for the limited purpose of bail, with the wider case still to be heard.

Who Lost Money

The people out of pocket are the depositors of the Fashion Gold companies across Kasaragod district, a group that press accounts describe as including small savers and Gulf-returnee families who placed money against the promised returns. On the Directorate's case, about Rs 20 crore of the roughly Rs 26 crore collected was diverted, per the bail order, though those figures are the prosecution's allegations rather than sums a court has found proven.

The spread of the harm is visible in the volume of complaints: a large number of separate cheating cases were registered against the promoters by Kerala Police, each reflecting depositors who say they were not repaid after the 2019 collapse. What those depositors have actually recovered is a separate question that the criminal cases do not directly answer; recovery in deposit-collapse matters typically runs through attachment and distribution processes and tends to lag far behind the sums claimed. At this stage the amounts are alleged and the recovery is unresolved.

Where It Stands Now

As of the record reviewed, both M.C. Kamarudheen and T.K. Pookoya Thangal are on bail, released by the Kerala High Court on 9 September 2025 in the Enforcement Directorate case, having earlier obtained bail in the state cheating cases as well. The prosecution remains live before the trial courts, and the Directorate's investigation and the state cases continue on their own tracks.

The court's observations should not be over-read. A grant of bail, even with a prima-facie remark that the material is thin, is not an acquittal and does not close the case; the trial will test the evidence. Equally, a set of registered cases and a provisional money-laundering charge are allegations, not findings of guilt. A chargesheet contains allegations, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues. The next milestones to watch are whether the Directorate challenges the bail, and the progress of the trials in the depositor-protection and PMLA courts.

What It Means

The case marks a distinction that often gets lost when a deposit scheme fails: the difference between a business that could not pay and a crime committed from the start. The Kerala High Court's reasoning, that failure to return deposits is not by itself cheating without fraudulent intention at inception, is the legal heart of the bail order, and it is why the money-laundering charge, which needs a qualifying predicate offence, was found weak at this stage. Whether that view survives trial is a separate matter.

For readers, the durable and practical point sits at the front end, before any money changes hands. Deposit-collection schemes promising high fixed returns should be checked against what the promoter is actually authorised to accept, and savers can compare promised returns against what a regulated fixed deposit realistically pays using Oquilia's FD calculator before committing funds. Oquilia's enforcement archive has tracked how these depositor cases move through the courts, alongside tax-fraud matters such as the Noida fake-firm GST case in the Allahabad High Court. Knowing which stage a case has reached, complaint, chargesheet, bail, trial or conviction, is what separates a collapse from a proven fraud.

FAQ

Does this mean the people named are guilty?

No. A chargesheet contains allegations, not findings of guilt. M.C. Kamarudheen and T.K. Pookoya Thangal are accused persons in a pending prosecution that has not been tried, they are presumed innocent until proven guilty, and due process continues. The grant of bail decides their custody, not the merits of the case.

What exactly did the Kerala High Court decide?

Per the order of Justice Bechu Kurian Thomas dated 9 September 2025, the court granted bail to both accused in the Enforcement Directorate case on a bond of Rs 50,000 each with two sureties, observing that there were prima facie no materials to assume the PMLA offence and that failure to return deposits does not by itself amount to cheating.

Does the bail order mean they were cleared?

No. A grant of bail, even with a favourable prima-facie observation, is not an acquittal. It is a decision about custody pending trial, made on the material available at that stage. The allegations remain to be tested at trial, and the presumption of innocence continues to apply until a court decides the case.

How much money is involved?

Per the bail order, roughly Rs 26 crore was collected by the four Fashion Gold companies, of which the Enforcement Directorate alleges about Rs 20 crore was siphoned away. These are the prosecution's figures, not sums found proven by a court. A large number of separate cheating cases were registered by Kerala Police in relation to unpaid depositors.

How can I check a deposit scheme before investing?

Verify what the entity is authorised to collect and from whom, be cautious of fixed high returns well above regulated deposit rates, and keep documentation of any money placed. Comparing a promised return against what a regulated fixed deposit actually pays is a simple reality check before committing funds.

Where can I read the official record?

The Kerala High Court bail orders of 9 September 2025 are published on Indian Kanoon, one for each petitioner, and are linked below. They set out the court's reasoning and conditions in full.

This report is based on the Kerala High Court bail order dated 9 September 2025 in the M.C. Kamarudheen matter and the companion order in the T.K. Pookoya Thangal matter, both by Justice Bechu Kurian Thomas, reviewed on 1 August 2026.