Section 27-A NDPS “Financing” Requires Funding Illicit Traffic (Not Mere Receipt of Funds): Anticipatory Bail Where Implication Rests on Co-Accused Statement and Bank Credits
1. Introduction
In MAZEED ALI v. UT OF J AND K TH S.H.O. POLICE STATION, MAJALTA, UDHAMPUR
(Jammu & Kashmir High Court, decided on 09-02-2026), the applicant (Mazeed Ali, 25)
sought anticipatory bail under Section 482 BNSS in connection with FIR No.0090/2025
registered at Police Station Majalta, Udhampur, for offences under Sections 8/21/22 NDPS Act,
with an asserted additional thrust of Section 27-A NDPS Act (financing illicit traffic/harbouring).
The prosecution case originated from a naka interception in which co-accused Latief Ali
was allegedly found in conscious possession of an intermediate quantity of heroin (“chitta”),
along with a weighing machine, a mobile phone and cash. The applicant was not apprehended at the spot;
his alleged role emerged later—principally via the co-accused’s statement and scrutiny of bank accounts
indicating substantial credits into the applicant’s accounts by co-accused persons.
The key issues before the High Court were:
(i) whether the available material made out, even prima facie, Section 27-A NDPS;
(ii) the evidentiary value at the bail stage of a co-accused statement recorded during NDPS investigation;
and (iii) parity and fairness considerations where the recovery-holder co-accused had already been granted bail.
2. Summary of the Judgment
The High Court allowed the anticipatory bail application and directed Mazeed Ali’s release on bail,
subject to surety/personal bond of Rs.1 lakh each and standard conditions (no similar offence, no tampering,
no leaving jurisdiction without permission, and cooperation with the IO).
The Court’s central findings were:
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On the facts presented, there was no prima facie foundation for Section 27-A NDPS:
the record did not show that the applicant financed illicit traffic (i.e., provided funds to facilitate it) or
harboured offenders; the allegation primarily showed that money was credited into his account by others.
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The applicant’s implication substantially rested on a statement of co-accused Latief Ali made while in custody;
the Court relied on Supreme Court authority that Section 67 NDPS statements are inadmissible as confessions.
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No contraband was recovered from the applicant; the alleged recovery was from a co-accused who had already been granted bail,
and the prosecution had not sought cancellation of those bails.
3. Analysis
3.1 Precedents Cited
(A) Rhea Chakraborty Vs. Union of India; AIRONLINE 2020 BOM 1252
The High Court drew interpretive assistance from the Bombay High Court’s discussion of Section 27-A NDPS,
including the Statement of Objects and Reasons behind the 1989 amendment and dictionary meanings of “finance.”
Using that approach, the Court emphasized a functional distinction:
“financing” is not automatically established by the presence of monetary transactions surrounding narcotics.
This precedent influenced the Court’s conclusion that:
sale/purchase payments (or the mere presence of money flows) should not be casually elevated into
“financing illicit traffic” without evidence that the accused provided funds to enable or sustain trafficking operations.
The Court relied heavily on Tofan Singh to address how far an NDPS investigation statement can be used against an accused.
It reproduced the ratio that officers empowered under Section 53 NDPS are “police officers” for Section 25 of the Evidence Act,
and therefore confessional statements recorded under Section 67 NDPS are inadmissible.
In practical bail adjudication terms, Tofan Singh constrained the prosecution from justifying arrest/bail denial
primarily on the basis of a co-accused’s custodial NDPS statement, especially where there was no recovery from the applicant.
The High Court used this decision to reinforce two points:
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After Tofan Singh, arrests and adverse bail outcomes cannot be sustained merely on the basis of
Section 67 NDPS “confession/voluntary statements”.
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Ancillary material like CDR details and allegations of tampering are typically matters for trial assessment;
at the bail stage, the absence of conscious possession recovery from the accused weighs strongly against denial/cancellation.
3.2 Legal Reasoning
(A) The Court’s construction of Section 27-A NDPS read with Section 2(viiib)
The Court anchored its reasoning in the text-structure of the NDPS Act:
Section 27-A must be read with the statutory definition of “illicit traffic” under
Section 2(viiib)(i) to (v).
It then drew a clear line between:
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Direct trafficking acts (possession, sale, purchase, transportation, concealment etc.) in
Section 2(viiib)(iii), which are typically prosecuted under Sections 20 to 23 NDPS; and
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“Financing” and “harbouring”, which are separately criminalised and punished under Section 27-A.
From this, the Court distilled an operative test:
“Financing” involves providing/raising/supporting funds to facilitate illicit traffic,
and is conceptually distinct from mere money movements that may occur in sale/purchase.
(B) Application to the facts: credits into the applicant’s accounts were insufficient for Section 27-A
The prosecution relied on the fact that large sums were deposited into the applicant’s accounts by co-accused persons.
The High Court held this fell short of the threshold for Section 27-A because there was
no material showing the applicant funded anyone else, or that he financed trafficking operations as a financier.
In short: being a recipient of funds (even suspicious ones) is not, without more, “financing”.
(C) Evidentiary fragility at bail stage: implication based on co-accused custodial statement
The Court noted the applicant was implicated on the basis of a statement made by his brother/co-accused during investigation,
while in custody. Guided by Tofan Singh and reaffirmed by
State by (NCB) Bengaluru v. Pallulabid Ahmad Arimutta and Anr.,
the Court treated such statements as incapable of forming the primary basis to deny bail,
particularly in the absence of independent recovery from the applicant.
(D) Parity and proportionality
A decisive factual consideration was that the co-accused from whose possession the intermediate quantity was allegedly recovered,
and another co-accused, had already been enlarged on bail by the trial court, and the prosecution had not sought cancellation.
This supported a parity-based and proportional approach to the applicant’s bail claim.
3.3 Impact
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Constraining overuse of Section 27-A: The decision signals that investigators/prosecution must plead and show
specific “financing” conduct—i.e., provision of funds to enable trafficking—rather than rely on
broad inferences from bank credits alone.
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Bail-screening for Section 27-A and NDPS rigour: Because Section 27-A is among NDPS offences that generally attract stricter
bail scrutiny, the Court’s insistence on a prima facie factual foundation operates as an important safeguard against
attaching Section 27-A to elevate the case severity without commensurate material.
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Post-Tofan Singh evidentiary discipline: The ruling reinforces the growing judicial trend that
custodial NDPS statements cannot become a substitute for recoveries, admissible confessions, or corroborated evidence,
especially at the liberty-sensitive bail stage.
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Financial-trail investigations: The judgment does not foreclose reliance on bank evidence; it clarifies that the
directionality and purpose of funds (who funded whom, and to facilitate what) are crucial to sustain a Section 27-A theory.
4. Complex Concepts Simplified
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“Anticipatory bail” (Section 482 BNSS):
A pre-arrest protection order—if the police arrest the person, they must be released on bail subject to conditions.
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“Intermediate quantity”:
A quantity between “small” and “commercial.” NDPS bail restrictions are typically harshest for “commercial quantity,”
but separate stringent categories also exist for certain offences like Section 27-A.
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Section 27-A NDPS (“financing illicit traffic” / “harbouring”):
Targets the back-end enablers—those who fund trafficking operations or shield traffickers—not merely those alleged to have
participated in a single sale/purchase or received money without proof of enabling finance.
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Section 67 NDPS statements after Tofan Singh:
Statements recorded by empowered NDPS officers cannot be used as confessions at trial; hence courts are cautious about using them as the
primary basis for arrest/bail denial without corroboration.
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“Conscious possession”:
Possession with knowledge and control. NDPS prosecutions often turn on whether contraband was recovered from, and attributable to,
the accused’s conscious possession.
5. Conclusion
This decision is significant for its disciplined approach to Section 27-A NDPS:
it underscores that “financing illicit traffic” requires prima facie material showing provision of funds to facilitate
narcotics activities (or harbouring), not merely suspicious bank deposits or the economics naturally accompanying sale/purchase.
Coupled with the post-Tofan Singh inadmissibility of Section 67 confessional statements,
the judgment strengthens liberty-protective scrutiny at the bail stage where implication rests on custodial co-accused statements
and no recovery is made from the applicant.