Author- Sumit Gupta
The question "Bail or Jail?" has always intrigued the lawmakers while formulating any special laws to prevent public disorder in the country.[i] The issue of liberty, justice, dignity, equality and public safety has made bail an integral part of a socially sensitised judicial process. This blurred area of the criminal justice system in India has, therefore, acknowledged the concept of granting bail rather than identifying jail as a norm. The courts have always tried to balance the competing interest of the state to maintain public order and collective interests of the community at large. Time and again, the legislature and the judiciary have gone into loggerheads regarding the enforcement, constitutionality and viability of the certain provision of special laws in the country. S. 45 of the Prevention of Money Laundering Act[ii] (hereinafter PMLA) is one of them. S. 45 specifically deals with the aspects of bail for the offence of money laundering. The High Court (hereinafter HC) of Patna, while granting anticipatory bail in May 2020, has once again raised a question mark on the revival and applicability of twin conditionalities enshrined in S. 45 of the PMLA.[iii]It is in these contexts; the author sets to analyse the conditionalities of bail enumerated in PMLA and how the amended S. 45 of the PMLA still fails to pass the litmus test of constitutionality. The author believes that it is only a matter of time when the Supreme Court (SC) will again strike down the amended S. 45 of the PMLA.
Bail under PMLA- Pre NikeshTarachand
S. 45 of the PMLA provided that the person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule[iv] shall not be released on bail unless the public prosecutor gets the chance to oppose the bail. Additionally, the courts then had to satisfy itself reasonably that the accused is not guilty of such offence and is not likely to commit such offence while on bail. Interestingly, the word "offence" in this section was tantamount to mean offences under Part A of the Schedule of the PMLA and not the offence of money laundering u/s 3 of the PMLA. This draconian provision of granting bail was scrapped in the case of NikeshTarachand Shah v Union of India.[v] The said provision was struck down on several grounds. It is worth mentioning a few of them.
The SC, while exploring the scheme of the PMLA, reiterated the concept encapsulated under Article 14 of the Indian Constitution.[vi] The SC pointed out that Part A of the Schedule under PMLA comprised a diverse set of offences which vary significantly in the quantum of punishment. The provision of bail which treats all of them, in the same manner, would tantamount to treating unequal as equals, thus violating the very essence of equality under Article 14. Riding on this principle further, the court observed that this kind of classification based on the sentencing policy of three years or more bears no rational nexus to the object of the PMLA. The SC also circumscribed claim raised under Article 21 of the Indian Constitution and stated that the said impositions regarding bail would inverse the presumption of innocence, thus violating the fundamental rights of personal liberty. The SC held that the impugned conditions for bail would make drastic inroads into the fundamental right of personal liberty. Thus, this draconian provision was struck down by the apex court.
Amended Section 45- Old Wine in a New Bottle?
In a move to de-link PMLA proceedings from those in scheduled offences pursued by other agencies, the amendment provided for uniform applicability of conditions imposed on bail thus shunning itself away from the previous requirement of Schedule ‘A’ offence that attracted more than three years of imprisonment.[vii]The government, in a bid to replace the intelligible differentia created by the previous legislation, removed the requirement of sentencing policy for granting bail. It emanates from the amendment that in cases where the accused has only been charged with money laundering but not a scheduled offence under Part A (as previously), will now have to satisfy the twin conditions before granting of bail.[viii]Before the amendment, the bail under S.45 was confined to the scheduled offence of PMLA that too which attracted three years or more imprisonment. However, this amendment has narrowed down the bail conditions by delineating the imposition on offence of money laundering.[ix] This means that a person accused under the offence of money laundering will now have to satisfy the twin conditions of S.45 of the PMLA.
Faults in the stars of Section 45
The amendment has once again brought the question regarding the imposition of twin conditions at the forefront notwithstanding the explicit judgment in NikeshTarachand. The proponent of this provision can argue that prior to the amendment, the twin conditions were applicable only to specific offences found in Part A of the Schedule. Post amendment, this has been remedied as the court can apply this provision for offences "under the act". Thus, the argument of intelligible differentia can be refuted. The proponents can also argue about the 'rational nexus' sought to be achieved for the enforcement of the object of the PMLA.
However, these arguments are superfluous.[x] Firstly, the provision completely ignores the fundamental problem of the twin conditions which inverse the 'presumption of innocence', contrary to the principles enunciated under the criminal jurisprudence. Individual liberty, if not checked by the judiciary, can become flickering candlelight in the hands of legislature and executive. This provision has the potential to curtail the liberty of an accused person. To glamorise chimerical provisions based on the scheme to tackle the menace of money laundering and confiscation of proceeds of crime would be devoid of fundamental values characterised by the forefathers of the constitution. After all, the concept of liberty of an individual is fundamental, which can only be eclipsed by 'procedure established by law'.[xi] However, this too has undergone a sea-change via incorporating 'reasonableness' in its jurisprudence. The 'due process of law', albeit not enshrined directly, has echoed indirectly in the developed jurisprudence surrounding individual life and liberty. Therefore, it is desirable that such provision should be subject to basic principle and not improvised brevity draped or at whims of the legislators.
Secondly, this provision leads to an incongruous position regarding 'anticipatory bail' and 'bail' per se. Suppose, a person 'A' seeks an anticipatory bail on the same offence as compared to a person 'B' who seeks a bail, then 'A' will not have to satisfy the twin conditions. Thus person 'A' can go scot-free without having satisfied the twin conditions of S. 45. PMLA fails to solve this incongruity, and this would tantamount to treating unequal as equals.[xii]
Thirdly, the judicial determination through this provision can start the cascading effect on the final outcome of the case when the case is heard at the merit stage. Even though the bail stage is confined to preliminary determination, this provision necessarily allows the court to decide on the prima facie guilt of an accused. PMLA, by its nature, relies on the other predicate offence, this translate into a dual finding of the court. For the sake of argument from the other side, one might argue that the findings at the bail stage bear nothing on the final outcome at the trial stage. Nevertheless, courts cannot overlook the earlier decided matter at the bail stage (arguably by SC or HC), and thus can seriously compromise the judicial infallibility while deciding on such matter.
Several HCs have deliberated on the question whether the re-framing of S. 45 of the PMLA has revived and possibly resurrected the twin conditions under sub-Section (1) of S. 45 for granting bail. The HCs, in UpendraRai vs. Directorate of Enforcement,[xiii]Dr.VinodBhandari Vs. Assistant Director, Directorate of Enforcement,[xiv]Sameer M. Bhujbal v. Assistant Director, Directorate of Enforcement (Bail Application No. 286/2018),[xv] have answered negatively about the applicability of S. 45 of PMLA. The HCs have relied on NikeshTarachand and reiterated the SC position by stating that "Provisions akin to S. 45 have only been upheld on the ground that there is a compelling State interest in tackling crimes of an extremely heinous nature." Thus, the courts have distinguished the offence under PMLA to those committed under other special laws such as TADA, NDPS, MCOCA etc. In the event, when offence under PMLA is not equated with other heinous offences, it has correctly been held by the HCs that merely amending the provision has not revived the twin conditions of S. 45. Interestingly, the SC in P. Chidambaram v. Directorate of Enforcement,[xvi]categorically held that only considerations required to be considered for the adjudication of the appeal relating to grant of bail to the appellant, are those given u/s 439 Cr.P.C. and neither the Solicitor General nor Court, went on to discuss or include the test of twin conditions in the said order while dealing with considerations of bail. Therefore, it can be conclusively asserted that the courts have paid little attention to the amended S. 45 of the PMLA while granting bail to an accused thus making the applicability of S. 45 redundant.
Merely tweaking the provision to incorporate offence "under the act" does not save the vicious application of S. 45 on an accused which violates the fundamental rights of an accused. The revival of S. 45 by the legislature is an afterthought of the SC's reasoning in NikeshTarachand. The legislature has overlooked the SC's apprehension about fundamental rights of an accused. Nevertheless, the primordial concern of the SC regarding individual liberty has been primarily protected by several HCs decisions post the amendment. It is only a matter of time that the SC itself takes the cognizance over this issue and strike down S. 45 from the PMLA, once and for all.
[The author is a 4th Year Law Student at NUJS, Kolkata]
[i]GudikantiNarasimhuluAndOrsv. Public Prosecutor 1978 AIR 429.
[ii]Section 45 in The Prevention of Money-Laundering Act, 2002.
[iii]Ahilya Devi v. State of Bihar Criminal Miscellaneous No.41413 of 2019.
[iv]Mondaq, Scheduled Offences Under AML Of India (Prevention Of Money Laundering Act, 2002 [PMLA])<https://www.mondaq.com/india/money-laundering/618922/scheduled-offences-under-aml-of-india-prevention-of-money-laundering-act-2002-pmla> last visited 26-06-2020. [v]NikeshTarachand Shah v. Union of India, Writ Petition (Criminal) No. 67 of 2017. [vi]Id. [vii]India Corporate Law, PMLA Amendment 2019 – Plugging the Loopholes<https://corporate.cyrilamarchandblogs.com/2019/09/finance-act-2019-prevention-money-laundering-act-amendment/> last visited 22-06-2020. [viii]The Proof of Guilt, Understanding Recent Developments in Bail under the PMLA<https://theproofofguilt.blogspot.com/2019/10/guest-post-understanding-recent.html> last visited 20-06-2020. [ix]Id.
[x]Bar & Bench, Notes on PMLA Act: Section 45 and the “twin conditions” post amendment <https://www.barandbench.com/columns/pmla-act-section-45-post-amendment> last visited 21-06-2020. [xi]Maneka Gandhi v. Union of India1978 AIR 597. [xii]Id. [xiii]UpendraRaiv. Directorate of Enforcement Bail Application No. 249/2019. [xiv]VinodBhandariv. Assistant Director Miscellaneous Criminal Case No. 34201 Of 2018. [xv] Sameer M. Bhujbal v. Assistant Director, Directorate of Enforcement Bail Application No. 286/2018. [xvi] P. Chidambaram v. Directorate of Enforcement CRIMINAL APPEAL NO.1831/2019.