Legal Narrative
ABSTRACT
The Prevention of Money Laundering Act, 2002 (PMLA) is the primary legislation to prevent crime and deal with the 'proceeds of crime'. Section 45 contains the stringent "twin-conditions" for bail. On the application of the accused, if the prosecution opposes bail, the court has to be satisfied that there are reasonable grounds for believing that the accused is not guilty and would not commit any offence whilst on bail. This paper traces the evolution of Section 45 since Nikesh Tarachand Shah v. Union of India till its interpretation in Manish Sisodia v. Directorate of Enforcement and Prem Prakash v. Union of India. The post Vijay Madanlal Choudhary position establishes an attempt to balance the objects of the PMLA with personal liberty and the right to speedy trial under Article 21. Though a high threshold for bail is set by Section 45, it does not completely take away judicial discretion, especially in cases where the trial is substantially delayed.
Keywords: Prevention of Money Laundering Act, 2002; Section 45; Twin Conditions; Bail; Article 21; Personal Liberty; Speedy Trial; Money Laundering
Introduction
The Prevention of Money Laundering Act, 2002 (PMLA) is a specialised legislation to combat money laundering and deal with the property involved in it. As money laundering affects the financial system and involves complex transactions, the Act provides for stringent safeguards and restrictions with regard to bail. The Section 451 plays a pivotal role in this scheme and prescribes the twin conditions for bail. In Nikesh Tarachand Shah v. Union of India,2 the Supreme Court invalidated the earlier form of Section 45. The provision was then amended by Parliament, and the modified version of Section 45 was upheld in Vijay Madanlal Choudhary v. Union of India3. Section 45 has been held to be consistent with Article 214 of the Constitution in subsequent decisions.
Legal Framework: Section 45 of the PMLA
Section 45 considers the offence under the PMLA as cognizable and non-bailable and prescribes specific conditions for granting bail. When the Public Prosecutor opposes the application for bail, the court has to be satisfied that:
• There are reasonable grounds to believe that the accused is not guilty of the offence;
• There is no likelihood that the accused will commit any offence whilst on bail.
In other words, Section 45 prescribes a higher threshold than ordinary bail proceedings. The Public Prosecutor needs to be given an opportunity to oppose the application for bail. In case of opposition to bail, the court has to evaluate both the statutory provisions. Accordingly, the examination of the twin conditions forms an integral part of the bail process.
The Situation Prior to the Vijay Madanlal Choudhary Case
In Nikesh Tarachand Shah v. Union of India, the Supreme Court interpreted the constitutional validity of the earlier twin conditions. At that time, the bail restriction applied to offences in Part A of the Schedule that carried a punishment of more than three years. The Court found the classification to be constitutionally invalid and struck down the relevant portion of Section 45. The Parliament subsequently amended Section 45 such that the twin conditions were applicable to the offence of money laundering directly instead of the classification of scheduled offences. The constitutional validity of the amendment was then examined in Vijay Madanlal Choudhary.
Vijay Madanlal Choudhary v. Union of India
The judgement in Vijay Madanlal Choudhary v. Union of India5 is the most pertinent one with regard to the amended Section 45. A three-Judge Bench upheld the validity of the amended twin conditions. The Court observed that though Section 45 imposes stringent restrictions on the right to bail, the restrictions do not bar bail absolutely. The judiciary's power and discretion in granting bail remain intact, albeit within the statutory framework. The judgement, thus, upheld the rigours of Section 45 whilst establishing that the trial court has the power to grant bail if the provisions are satisfied.
The first 'twin condition'
The first condition requires the court to be satisfied with "reasonable grounds for believing that the accused is not guilty of the offence". This is stricter than the usual application at the stage of bail. The court has to assess the materials on record to the extent that it can find reasonable grounds that show that the accused is non-involved or innocent. However, it must be borne in mind that a mini-trial should not be conducted at this stage. The materials on record must not prejudice the trial. The bare denial of the allegations is not sufficient to satisfy the twin conditions; the materials need to substantiate the requirement.
The second 'twin condition'
The second condition requires satisfaction that the accused is not likely to commit any offence whilst on bail. The condition is of a preventive nature. The court may consider the antecedents of the accused, the nature and manner of the alleged offence, the possibility of repetition, likelihood of tampering with evidence or investigation, and other relevant circumstances. Satisfaction of one of the two conditions is not sufficient to grant bail; both the conditions should be met to decide the bail application under Section 45.
Bail under Section 45: Mandatory, but not an absolute bar
The post-Vijay Madanlal Choudhary position establishes that though the twin conditions are mandatory, they are not absolute bars to bail. Section 45 restricts the exercise of the right to bail but does not wholly exclude the exercise of judicial power. The court has to exercise its discretion as is consistent with the statutory provisions. Accordingly, the correct position is that PMLA bail has a high threshold but is not legally impossible. Personal liberty still holds constitutional relevance even under a special statute.
Article 21 and the Right to a Speedy Trial
The subsequent decisions highlight that the PMLA bail has a constitutional dimension. In Manish Sisodia v. Directorate of Enforcement6, the Supreme Court dealt with the issue of prolonged incarceration and reiterated that speedy trial forms part of the fundamental rights under Article 21. The Court clarified that Section 436A of the CrPC cannot be construed to mean that a defendant accused under the PMLA has to remain in custody till the statutory period elapses. In Prem Prakash v. Union of India (through the Directorate of Enforcement)7, the Court held that the Article 21 rights cannot be arbitrarily curtailed by Section 45. In cases where the trial is unlikely to conclude in the near future, prolonged incarceration ceases to be a constitutional violation. In other words, the statutory restriction and personal liberty have to be balanced with due regard to the provisions of Article 21.
Impact of Prolonged Incarceration
Prolonged pretrial detention cannot be considered a proxy for punishment. In cases where the accused has been kept in detention for a long duration and the trial is likely to take much time, the courts may consider releasing the accused on constitutional grounds, despite the statutory provisions. Now, this release does not invalidate Section 45, but the provision is considered in tandem with the constitutional provisions. The duration of detention and progress of trial, thus, may be a relevant consideration in deciding the continued detention of the accused.
The Role of the Court at the Bail Stage
The court has to bear in mind while deciding an application for PMLA bail the requirement of balancing the provisions. It should:
Give the Public Prosecutor an opportunity for opposing the application; Examine the applicability and satisfaction of the twin conditions; Evaluate the materials on record without conducting a trial;
Examine the likelihood of the accused committing any offence; Consider the duration of custody and progress of the trial;
Take into account Article 21 if the incarceration has been prolonged; and Record sufficient reasons showing the application of judicial mind.
As the Supreme Court has made it clear, the twin conditions cannot be trivialised through irrelevant considerations. Thus, the order for bail should be decided by addressing the statutory requirements.
In-depth Analysis
The post Vijay Madanlal Choudhary framework seeks to balance the provisions of the PMLA8 with the constitutional principles of criminal jurisprudence. Money laundering is a serious economic offence, and hence, the provisions for investigation, attachment, prosecution, and bail are stringent. On the other hand, an accused should be considered innocent until proven guilty, and the custody should not become punitive.
The subsequent judgements have not invalidated the twin conditions but have evaluated the provision in its constitutional framework. Section 45 continues to be operative but with regard to personal liberty and the right to speedy trial under Article 21. This is especially relevant in cases where the documents are voluminous and the witnesses are plentiful, thereby requiring much time for the trial. In deciding continued detention, the courts may consider the possibility that the trial can conclude within a reasonable time.
Conclusion
The law with regard to bail under the PMLA9 has evolved through the decisions of Nikesh Tarachand Shah, Vijay Madanlal Choudhary, Manish Sisodia and Prem Prakash. Section 45 applies two stringent and mandatory conditions for granting bail: after giving an opportunity for the Public Prosecutor to oppose the application, the accused should be able to satisfy the court that there are reasonable grounds to believe that the accused is not guilty and would not commit any offence whilst on bail.
Vijay Madanlal Choudhary does not imply that bail is absolutely barred under the PMLA. Judicial discretion continues to exist, subject to the statutory provisions. The subsequent decisions have also emphasised the constitutional provisions of Article 21. In cases where the incarceration becomes unduly prolonged and the trial has no reasonable expectation of being concluded within a reasonable time frame, personal liberty and speedy trial acquire special relevance. Hence, the current framework represents a balance between Section 45 and Article 21, between the objects of the PMLA and the constitutional requirements of liberty and due process.
FOOTNOTES
1 Prevention of Money Laundering Act, 2002, s.45.
2 (2018) 11 SCC 1.
3 (2022) SCC 929
4 Constitution of India, art.21.
5 (2022 SCC 929)
6 2024 INSC 595, (August 9, 2024)
7 2024 INSC 637, ( August 28, 2024)
8 Prevention of Money Laundering Act, 2002
9 Prevention of Money Laundering Act, 2002
