For a Country to prosper it is important that its laws and regulations are just,
fair and reasonable. In India, Parliament has power to bring in legislation(s)
and the Parliament needs to ensure that the laws promulgated are not in
violation of the fundamental rights as enshrined in the Constitution of India.
It is the responsibility of the judiciary to interpret the laws rolled out by
the Parliament for determining that the laws are not against the basic structure
of the Constitution.
In 2002 the Parliament introduced -The Prevention of Money Laundering Act, 2002
(PMLA) as there was a need to combat the menace of money laundering generated
through illegal activities like sale of drugs, illegal substance, corruption,
round-tripping, and to punish those involved in the crime. Therefore, the PMLA
was enacted to seize and punish those involved in the said illegal activities
and to save the financial system of the country.
PMLA was enacted to not only stop huge illegal money that was making its way
into the economy but also as a response to the India's commitment to the Geneva
Convention to combat the economic crimes, impacting financial system and
integrity of country. PMLA made it clear that the agency under PMLA is not a
"police agency" and therefore, the provisions of the Criminal Procedure Code (CrPC)
are not made applicable. Since the introduction of the PMLA the Country has
witnessed a tussle over the enforcement of the provisions of PMLA dealing with -
issuance of summons, search, seizure and statements made before these
authorities under PMLA to be in direct violation of the fundamental rights of
the persons defined in PMLA.
The provisions of the PMLA are being invoked against the corporates,
entrepreneurs and the politicians. Recently, the politicians claimed that
invocation of PMLA against them as a political vendetta while the corporates
portrayed it to be punishment for claiming acquiescence with the non-ruling
parties. The prominent politicians who have been subjected to the enquiry under
PMLA being Mr. Rahul Gandhi, Mrs. Sonia Gandhi, Mr. Karti P. Chidambaram and
Mrs. Kalvakuntla Kavitha and many others. The Hon'ble Supreme Court and the High
Courts have been flooded with petitions challenging the constitutional validity
of various provisions of PMLA.
PMLA upheld by Hon'ble Supreme Court:
The Hon'ble Supreme Court in Vijay Madanlal Choudhary v. Union of India
upheld the provisions of the PMLA. The provisions of PMLA though have been
upheld there is a need to relook the provisions dealing with bails for the
person arrested or impending arrest under the PMLA. It is imperative that we
analyze and ascertain if the present provision dealing with bail under PMLA can
sustain today's need of the hour. There is a need to have a detailed
deliberation with respect to various provisions that have direct impact on the
grant of bail to the person arrested or to be arrested under the provisions of
Bail under PMLA
In criminal jurisprudence the presumption of innocence is in favour of the
person unless he is proved otherwise in the court of law. The Hon'ble Supreme
Court in State of Rajasthan v. Balchand held that "The basic rule may
perhaps be tersely put as bail, not jail". The Hon'ble Supreme Court also
provided the guiding factors to protect the accused from illegal arrest as
detailed in Arnesh Kumar Vs. State of Bihar
. However, these settled
principles of criminal law have literally no force while the case is being
prosecuted under the provisions of the PMLA.
The Hon'ble Supreme Court in Satender
Kumar Antil V. Central Bureau of Investigation and Another
 reiterated the
rights of the accused and the constitutional guarantee available to the accused
facing prosecution under the provisions of the criminal law. PMLA has ignored
basic rights of the accused that are required to be protected under the
Constitution, few of such rights that needs to be re-considered in the light of
the recent judgment passed by the Hon'ble Supreme Court in Vijay Madanlal
Choudhary v. Union of India
are detailed below:
- Presumption of innocence: This presumption is taken away under Section
45 of the PMLA. This word "presumption" is an alien word under PMLA. The accused
needs to prove his innocence beyond doubt to secure a bail. While the person as
defined under Section 2(s) of the PMLA when subjected to the proceedings under
PMLA is also deprived of constitutional protection under Article 20(3) of the
Constitution of India for making statements that are self -incriminating.
- Bail is Rule and Jail is exception: The rule of bail has seen a sea
change while it is being applicable to the cases prosecuted under the
provisions of the PMLA. The famous twin conditions under Section 45 of PMLA are to be
satisfied by the accused charged of money laundering to be released on bail. The
section itself prescribes the conditions to be satisfied being:
- that the public prosecutor is given opportunity to oppose the application
for release of the accused and
- where the public prosecutor oppose the application, the Court should be
satisfied that the accused is not guilty of the offence and he is not likely
to commit the offence while on bail.
Initially the Hon'ble Supreme
Court in Nikesh Tarachand Shah vs UOI stuck down Section 45 of PMLA stating
it is arbitrary, discriminatory and violation of Article 14 and 21 of the
Constitution of India. Section 45 of PMLA then underwent an amendment on
19/4/2018 whereby the reference to offence under "Part-A of the Schedule" was
substituted by the expression "under the Act". Though the amendment was brought
into force considering the judgement passed in Nikesh Tarachand Shah, there is
no change in the rule regarding bail and the accused still needs to pass the
twin condition to be released on bail.
- Subjective satisfaction: The power of the Enforcement Directorate to
arrest a person arises under Section 19 of the PMLA. The reading of Section 19
of PMLA clearly demonstrates that any person can be arrested on subjective
satisfaction of the Director, Deputy Director, or Assistant Director based on
the information and material available.
The accused so named in the warrant of
arrest will have no scope to counter or produce any document to avoid the
arrest. Once arrest is effected the only way the accused can be rescued is
through bail which occurs only when the twin conditions are satisfied.
Therefore, there are absolutely no grounds to avoid arrest under PMLA except for
satisfying the conditions mentioned in Section 45 of the PMLA.
The fact that
under Section 50 of the PMLA the statements made by the accused person to the
officials of the Enforcement Directorate during investigation will be admissible
as evidence, will be an additional reason for denial of bail. Though the Hon'ble
Supreme Court held that the statement recorded by the authorities under PMLA
cannot be hit by Article 20(3) or Article 21 of the Constitution of India, but
this statements will definitely act against the interest of the person and
create a hurdle while granting bail and thereby cause injustice to the accused.
- Amendment vide Finance Bill: The amendment made to Section 45 in 2018
vide Act 13 of 0218, was challenged and the Hon'ble Supreme Court in Vijay Madanlal Choudhary & Ors. Vs. Union of India upheld the said amendment and
clarified that there is no absolute restraint on grant of bail under Section 45.
In the judgment the Hon'ble Supreme Court has clarified that bail can be
obtained as "The discretion vests in the Court which is not arbitrary or
irrational but judicial, guided by the principles of law as provided under
Section 45 of the 2002 Act"
Though the Hon'ble Supreme Court has upheld Section 45 of the PMLA with a rider;
the rights of the person to obtain the bail suffers from settled principles of
law in criminal jurisprudence. The person seeking bail is for majority of time
will not even have a copy of Enforcement Case Information Report (ECIR) which
would detail the charge made against the person. In the absence of such crucial
document/ ECIR asking the person to prove his/her innocence is against the
settled principles of law "innocent until proven guilty". Proving innocence at a
stage of granting bail will be a herculean task more so when the statute makes a
presumption of guilt.
The Hon'ble Supreme Court upheld various provisions of the PMLA, including
Section 45, however, it appears that the twin condition that was originally
stuck down is not taken to its logical end. The amendment has not addressed the
reasoning of the Hon'ble Supreme Court in Nikesh Tarachand Shah vs UOI
the Section 45 was stuck down as Section 45 had reversed the settled law of
"presumption of innocence"
The judicial activism is seen as the need of the hour more specifically to
restore the settled law of presumption of innocence while dealing with bails
under the provisions of the PMLA. The Hon'ble Supreme Court in Binoy Vishwam V.
Union of India & Ors.
 has held that the Courts can strike down legislation
either on the basis that it contravenes fundamental rights or other
constitutional rights/ provisions of the Constitution of India. The legal
fraternity is hopeful that these issues will be addressed in the review petition R.P (Crl.) No. 219/2022 (2022 SCC OnLine SC 1084) filed against the judgment
Vijay Madanlal Choudhary v. Union of India now pending before the Hon'ble
- Herur Rajesh Kumar, Advocate, Practising at High Court for the State of Telangana Herur Associates- Views are personal.
- 2022 SCC OnLine SC 929
- 1977 (4) SCC 308
- AIR 2014 SC 2756
- 2022 SCC OnLine SC 825
- 2018 (11) SCC 1
- 2017 (7) SCC 59
Award Winning Article Is Written By: Mr.Herur Rajesh Kumar
Authentication No: OT327851460413-5-1023