ABSTRACT
Recently, the Hon’ble Supreme Court, while hearing a petition under Article 32, denounced the trend of petitioners circumventing alternative channels of appeal and submitting Article 32 petitions to the Supreme Court in an effort to directly contest summonses or request bail while pretending to be contesting the PMLA’s provision. This decision came after a review petition was filed against the Vijay Madanlal Choudhary judgement delivered on July 27, 2022. While the recent remark by the Supreme Court is a welcome step, it tends to forget that there is a pendency of over 1000 cases that have been at various stages of trial since 2005. With such a high rate of pendency, the accused is left with no remedy but to seek bail under Section 45 of the PMLA, 2002.
Now, the twin conditions that Section 45 provides are problematic in various senses, as they place a high burden on the accused to prove their innocence in order to qualify for bail, which is usually difficult to satisfy at the lower level of courts, leaving the matter to go to the higher courts and finally the supreme court. Further, there is a lot of inconsistency while the courts decide the matters pertaining to bail. In this article, the authors analyse the PMLA jurisprudence on bail while raising the inconsistency of Indian courts while granting bail.
INTRODUCTION
We are in the 21st century, the age where AI is taking over and the economies around the world are rapidly transforming. Yet, the world at large is facing the common problem of white-collar crimes. White collar crime can be understood as a crime where corporate professionals or the upper-class/wealthier section of people engage in unlawful activities to make money. Crimes such as corruption, money laundering, cheating, etc. are white collar crimes that are prevalent all around the world.
If we talk about India, money laundering is something that is generally discussed, and a lot more is talked about. Money laundering is the conversion of illegally obtained money or assets into legal sources of money obtained through illegal activities such as drug trafficking, terrorism, cheating, corruption, scams, etc. To combat money laundering, India came up with legislation in early 2000; however, the problem persists till now. The Prevention of Money Laundering Act 2002 (PMLA) was enacted in 2000 and provides for procedures for investigations into the offence of money laundering with relation to scheduled offences.1 PMLA was enacted with the objective of combating money laundering and punishing people engaged in such offences. It provides a mechanism for confiscation of property obtained through the proceeds of crime or activities of money laundering.2 It is important to note that even with the 2019 amendments, the PMLA still does not offer a rigid solution to various provisions, especially in coping with the growing threat of money laundering and emigration from the country. The PMLA came into force in 2002 to provide for the prosecution of wrongdoers and criminal punishments if found guilty. Regarding the right of an accused person to use the option of bail, one of the significant questions lacks an answer.
The Supreme Court has had several opportunities to address various PMLA issues and has made some extremely important judgements as a result.3 Currently, Section 45 deals with the provision for bail. Section 45 stipulates twin conditions to be satisfied in order for the judge to grant bail to the accused. Firstly, the public is being heard and given the opportunity to oppose the grant of bail. Secondly, the court believes that there are reasonable grounds for the court to believe that the accused is not guilty of the offence that he has been charged with and is not likely to commit the offence while he or she is on bail. Now, these conditions are problematic in various ways, as they put the burden on the reverse side, and in fact, the accused has to satisfy the court that he or she has not committed the offence. Practically speaking, a bail trial is done at the starting stages of the trial, and then the accused has to prove their innocence. Further, if he or she failed to prove innocence in order to get bail, that indirectly means he must be guilty of an offence, so why is the conviction rate so low for the offence of money laundering? Another problem with the provision is that the accused has to satisfy the court that they will not commit any offences on bail. Now, this condition is very vague, and again, the burden is very high. The accused has to make sure that it does not commit any offence. Any offence is nowhere defined and can include offences outside of money laundering as well. Although the points raised above were considered in the Nikesh Tarachand case, Section 45 was held unconstitutional on the grounds of violating Articles 21 and 14 of the Indian Constitution.4 However, the Finance Act of 2018 revived the twin conditions, and since then, these have continued to exist.5 The latest Vijay Mandal judgement also upholds its validity.6 In this paper, the authors analyse the significant bail jurisprudence on PMLA with an analysis of recent case laws while criticising the reasoning given in the recent judgement upholding the validity of Section 45. The paper also shows the approach of the court, while in some cases it grants bail while not in other cases, showing inconsistency and confusion.
SOME RELEVANT SECTIONS OF PMLA ARE:
“Section 2: Proceeds of Crime”
2(u) “proceeds of crime” “means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property 3 [or where such property is taken or held outside the country, then the property equivalent in value held within the country] 4 [or abroad].” 7
“Section 3: Money Laundering”
“Offence of money-laundering. — Whoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the 1 [proceeds of crime, including its concealment, possession, acquisition, or use and projecting or claiming] it as untainted property shall be guilty of the offence of money laundering.” 8
“Section 45. Offences to be cognizable and non-bailable. —
(1) “[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence 2 [under this Act] shall be released on bail or on his own bond unless—]
(i) The public prosecutor has been given an opportunity to oppose the application for such release; and
(ii) Where the public prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such an offence and that he is not likely to commit any offence while on bail”:
“Provided that a person who is under the age of sixteen years, or is a woman, or is sick or infirm, or is accused either on his own or along with another co-accused of money-laundering a sum of less than one crore rupees, may be released on bail if the Special Court so directs.” 9
BAIL UNDER PMLA: UNDERSTANDING THE PROBLEMATIC TWIN CONDITIONS: SEVERITY AND COMPLEXITY
The term “bail” is not defined in the Criminal Procedure Code (Cr.P.C.), 1973, the Indian Penal Code, 1860, or the PMLA. The definition of “bail” in a dictionary is a guarantee that a prisoner will show up in order to be released. In the Vaman Narain Ghiya v. State of Rajasthan case10 the honourable Supreme Court defined “bail” and came to the following conclusion: “Bail may be regarded as a mechanism whereby the state devolutes upon the community the function of securing the presence of the prisoners and at the same time involves the participation of the community in the administration of justice.” The primary legal tenet that ‘bail, not jail, ought to govern our criminal justice system has been steadfastly upheld by the Supreme Court on numerous occasions.11 A Court of Sessions designated as a Special Court shall have jurisdiction over any scheduled offence related to the offence of money-laundering, as well as any offence punishable under Section 4 of the PMLA12 (punishment for money-laundering), as per Sections 43 and 44 of the PMLA. Trials will be held by the Special Court in compliance with Cr.P.C. regulations. The many laws connected to the establishment of special courts for the trial of PMLA offences, including the granting of bail, are relevant to mention here, etc. Under the heading “Offences to be cognizable and non-bailable,” Section 45(1)13 of the PMLA, 2002, which is a non-obstante provision, specifies the following: Regardless of the provisions stated in the Code of Criminal Procedure, 1973 (2 of 1974), an individual charged with a crime under this Act cannot be released on bail or on their own bond unless: (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such an offence and that he is not likely to commit any offence while on bail.
(i) The public prosecutor has been given the chance to contest the request for release;
and
(ii) In the event that the public prosecutor objects to the request, the court is convinced that there are plausible grounds to believe the accused is innocent of the crime in question and unlikely to commit another one while on bail.
In general, under the CrPC, a court hearing a bail application takes into account various factors such as the type and gravity of the charge, the strength of the evidence supporting the accused’s guilt, the possibility of witness alteration, the risk of the accused fleeing, and the possibility of recurrence.14 However, the assumption of innocence was turned on its head by the PMLA’s twin criteria, which also made getting released on bond practically impossible. The constitutional validity of Section 45 of the PMLA15 was contested in the case of “Nikesh Tarachand Shah v. Union of India (UOI) and Ors” 16 through appeals and writ petitions, arguing that it violates Articles 14 and 21 of the Indian Constitution. In cases where a crime covered by Part A of the Schedule to the Act carries a sentence of more than three years in imprisonment, Section 45(1) sets two requirements for the granting of bail. The requirements are as follows: any application for release on bond must give the public prosecutor a chance to object, and in the event that the public prosecutor objects, the court must be convinced that there are adequate reasons to believe the accused is not guilty of the offence in question, in addition to believing he is not likely to commit another offence while on bail. The court held that Section 45(1) establishes the requirement that the Court, in determining whether to grant bail under Section 45, be satisfied that there are not sufficient reasons to believe that the individual is not guilty of any offence under Part A of the Schedule, which is an entirely distinct offence from money laundering. In this sense, the Court considers schedule offences rather than money laundering offences. Setting a requirement that is unjust, prejudiced, and discriminatory in nature and has nothing to do with money laundering offences but rather other schedule offences was deemed by the Court.
Finally, the Supreme Court struck down the twin conditions mentioned under Section 45(1) of the PMLA as being violative of Articles 14 and 21 of the Constitution17 and ordered that all such matters where bail was denied because of the presence of the 45(1) PMLA be rehearsed on merit by the respective courts.
APPLICABILITY OF THE TWIN CONDITION UNDER SECTION 45(1) PMLA POST 2018 AMENDMENT
In response to the “Nikesh Tarachand case” 18, Section 45 of the PMLA was revised as of April 19, 2018, by the Finance Act of 2018, substituting the phrase “under this Act” for the phrase “punishable for a period of imprisonment of more than three years under Part A of the Schedule.” In the case “Vinod Bhandari v. Assistant Director, Directorate of Enforcement” 19 Even though Section 45(1)(ii) of the PMLA was amended in 2018, the previous provision has not been reinstated. It should be noted that Sub-section (1) of Section 45 of the PMLA Act now includes the phrase “under this Act” following the revision to Section 45(1) of the PMLA Act. Nevertheless, the aforementioned Amending Act does not bring back or resuscitate the original Section 45(1)(ii). It should be emphasised that the Notification dated March 29, 2018, which amended Section 45(1) of the PMLA Act and went into effect on April 19, 201820, does not address the applicability of the amendment retrospectively. It should be further noted that the original Sub-section 45(1)(ii) has not been revived or resurrected by the Amending Act. Consequently, as of right now, the two additional conditions under the original Section 45(1)(ii) of the PMLA Act for the accused’s release on bail under the said Act are no longer strictly enforced. The ruling in the Dr. Vinod Bhandari case is predicated on the Supreme Court’s ruling in the Nikesh Tarachand Shah case, wherein the Court took into account further enactments that met the same dual requirements.
The ruling states as follows: We must remember that Section 45 is a severe clause that completely undermines the presumption of innocence, which is essential to every individual facing criminal charges. We must be absolutely certain that a section serves a vital state purpose in combating severe crime before enacting it, as Article 21 of the Indian Constitution guarantees the fundamental right to personal liberty. If Section 45 is applied indiscriminately without a compelling state interest, that will undoubtedly be against Article 21 of the Constitution. Similar provisions to Section 45 have only been maintained because the state has a strong interest in combating crimes of the most heinous kind. The Supreme Court in Nikesh Tarachand Shah stated that an analogous provision under Section 20(8) TADA was upheld since it was essential for the state to cope with terrorist activities, which are more hazardous to contemporary society than any other activity, citing the Constitution Bench’s decision in “Kartar Singh vs. State of Punjab”21. Section 20(8) of TADA22 was affirmed because the offence under TADA was deemed to be a severe offence that aimed to combat the vice of terrorism. The crime was punishable by death or life imprisonment and was subject to a Special Court’s review. Furthermore, the statement that the accused is unlikely to commit any crimes while free on bond referred to crimes punished solely under the TADA and not by any other laws.
However, the Hon’ble Supreme Court has now confirmed the constitutional legitimacy of “twin conditions” for release under revised Section 45(1) of the Prevention of Money Laundering Act, 2002 Act, in the case of “Vijay Madanlal Choudhary v. Union of India”.23
It was decided that Section 45(1) must pass the fairness, rationality, and having a connection to the aims and objects test because money laundering is one of the most horrible crimes.24
DISREGARDING FUNDAMENTAL PRINCIPLES: AN ANALYSIS OF THE VIJAYMANDAL CASE JUDGMENT
Now the Hon’ble Court disregarded certain principles while upholding the validity of Section45. The scope and effect of such twin conditions cannot be construed as calling for mandatory applicability, since this would be violative of Articles 14 and 21 and would be inconsistent with the established procedure of criminal trial laid down under CrPC. Such conditions are also mandated in various other central and state laws, wherein bails have been granted regularly by the courts on the basis that a delicate balance ought to be maintained between confinement and acquittal through judgements and an order granting bail much before the commencement of trial. Furthermore, at the time of bail issuance, no court may record a satisfaction and belief that an individual is “guilty” or “not guilty” of the offence.” “Regardless of training, no court can be “reasonably” convinced that an individual will not commit any crimes, maybe even those covered by the NDPS Act, after being released from custody. It can only be an educated guess, which might or might not be accurate. Nevertheless, reasonable contentment, indicated as qua in the second criterion, is required, not speculation. Actually, the requirements outlined in Section 45 reverse the presumption of innocence that is linked to any individual facing criminal charges; on the other hand, the presumption is attached to the granting of ordinary bail.
Further, Article 21 of the Constitution of India is the bedrock of our right to personal liberty, i.e., the principle of natural and equitable justice, which is a fundamental right of every Indian citizen. It’s time that the judiciary hold their heads high and encourage or enable fair judgements instead of letting the ED make a mockery of our judicial system and be an agency to be misused rampantly by an aggressive central government that believes in bulldozing its own executive agencies and exerting unwarranted pressure on the judicial system.25 Furthermore, time and again, the Hon’ble Supreme Court has repeatedly and strongly advocated for the basic rule of law in our criminal justice system: “Bail, not jail.” There is a plethora of S.C. judgements that reinforce this basic rule again and again with regular frequency. The Apex Court, in various judgements, stressed the following tenets:
➢ It is imperative for courts to maintain their status as the primary barrier against the infringement of citizens’ rights to liberty.
➢ Even a single day taken away from one’s freedom is too much.
➢ When making decisions, courts must always consider the wider systemic ramifications of their actions. Despite such amplified and clear advisories from the Apex Court, the Lower Courts and very often High Courts suffer from indifference or paralysis in granting bails, resulting in a long period of incarceration of suspects, who are forced to suffer every moment of their judicial custody in prisons that are overcrowded and therefore super spreaders of COVID, devoid of medical facilities, lack of basic hygiene conditions, and severe malnutrition, resulting in a huge adverse impact on life expectancy. What is distinctly alarming is that the lower courts are in the tight grip of a severe fear psychosis while hearing bail matters under special acts such as the PMLA (Prevention of Money Laundering Act)26. The ED has created a paranoia not amongst the accused, but this paranoia has percolated and frozen the Lower Courts to examine objectively, without fear or favour, while meritoriously deciding bail matters in PMLA cases, resulting in a long period of captivity for the suspects, who are illegally compelled to undergo a pre-trail protracted period of punishment in suffocable prison conditions. 27
The Apex Court has often emphasised that holding an under-trial in jail puts the accused’s preparations severely at risk since he cannot adequately brief and consult with his attorneys, gather evidence for his defence, and mount a strong defence. This obviously means that the accused is deprived of the right to a fair trial, which is protected by Article 212 of the Constitution. Additionally, the weight of the accused’s custody usually rests on the innocent family members, who are frequently powerless due to their ignorance of the harsh laws and lack of financial resources due to the astronomical legal fees associated with the prolonged bail periods.
Furthermore, although Article 21 clearly guarantees a clear constitutional stance, the twin conditions are obviously arbitrary, turning the right to the presumption of innocence on its head and severely invading the accused’s liberty. A key component of the right to a fair trial in the pre-constitutional era, Section 45 of the PMLA eliminates the presumption of innocence that was traditionally accorded to the accused parties under criminal jurisprudence. Furthermore, the ICCPR has acknowledged these rights as well.28
Moreover, Raids are at an all-time high, but convictions remain elusive. The Hon’ble former CJI Ramanna pointed out recently in the context of Section 124A of the IPC (Sedition Law) that “the conviction rate in such cases is very low and urged the government to scrap this section
29. Barely 3% of cases booked under Section 124A of the IPC end in conviction, as observed by the CJI. However, if you thought 3% was a low conviction rate, you will disbelieve the fact that the conviction rate under PMLA is less than 0.5%. In the past nine years, the ED has conducted 1700 raids under the PMLA, from March 2011 to January 2020, in conjunction with 1569 specific investigations. Of these, just nine cases—the majority of which are rather routine cases—have resulted in convictions. It’s quite obvious that during the trial process, ED hasn’t been able to persuade the courts that their accusations are true at all. Not only does the ED’s conviction record in PMLA cases remain utterly low, but its attempts to appeal unfavourable rulings are equally pitiful. The ED had 13 PMLA cases pending appeal in the 2013 fiscal year; however, in the following year (2014)30, the number of cases was reduced to one without any new convictions. This suggests that at least 12 of the appeals were dismissed by a higher court.31
UNDERSTANDING THE PROBLEMATIC TWIN CONDITIONS: SEVERITY AND COMPLEXITY
The same accused person must pass the test described in Section 45 regarding the same scheduled offence for which he is already on bail in order for the bail to be considered in PMLA proceedings. A person’s bail could be raised in light of the intended offence. The accused must nevertheless meet the criteria of Section 45 with regard to the same offence for which he was previously found not guilty, even if he is found not guilty of the scheduled charge.32 Section 45(1) presents a challenging situation as the disputed twin conditions are unrelated to the PMLA violations. The court believes that the accused has carried out a predicate or scheduled offence that results in an unambiguously arbitrary, prejudiced, and unjust outcome that would negate the section because it does not consider the accused’s guilt or innocence regarding money laundering.
The PMLA contains no language that prohibits the granting of pre-arrest bail. If someone is arrested for money laundering or violating Part A of the Schedule, they may be granted anticipatory bail without having to fulfil the twin requirements. However, if they are later charged with those same crimes, they will need to fulfil the twin requirements under Section 45 before being granted regular bail. Section 45 fundamentally undermines the presumption of innocence, which is detrimental to anybody who is charged with a crime. Prior to implementing a law that infringes upon an individual’s right to personal freedom as guaranteed by Article 21 of the Indian Constitution, the Court must be extra confident that it advances a compelling state interest in preventing serious crime33. In the absence of such a compelling state interest, the indiscriminate application of the challenged criteria of Section 45 will surely violate Article 21 of the Constitution.
CONCLUSION
It is often said that getting bail is easier in a murder case than in a money laundering case.
Section 45, which provides for the “twin conditions” for getting bail, states that a court can only issue bail if it is convinced that there are reasonable reasons to believe that the accused is not guilty of the alleged offence and that he is not likely to commit any offences while out on bail. So how precisely is a defendant meant to persuade the court that they are innocent and unlikely to commit any crimes while out on bail? Reviving the twin conditions completely ignores their fundamental flaw, which is that it permits the accused’s freedom to be restricted because it requires the accused to persuade the court during the bail stage that he has good reason to believe he is “not guilty” of the offence in question and that he is “not likely” to commit any other crimes while out on bail. Relevantly, even if you committed one of the current terrible crimes, you can still be released on bail if you agree to a number of requirements, such as not being a flight risk and agreeing to constantly assist with the investigation.
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