Securing bail under the Prevention of Money Laundering Act, 2002 (“PMLA“), is challenging due to the high threshold for bail stipulated by the Act. Section 45 of the PMLA stipulates that bail may be granted to an accused in a money laundering case only if two conditions are met: first, the Public Prosecutor must be given the opportunity to oppose the bail application; second, there must be prima facie satisfaction that the accused has not committed the offence and is not likely to commit any offence while on bail. It is frequently contended that these twin conditions pose a significant challenge to the prevailing legal principle in criminal jurisprudence that “bail is the rule and jail is the exception”. The Hon’ble Supreme Court has observed that the twin conditions challenge an accused’s right to liberty under Article 21 of the Constitution[1].
Earlier, the rigours of Section 45 of the PMLA were so stringent that securing bail was a gruelling task. Lately, the courts in India have read protection of life and liberty under Article 21 of the Constitution within the ambit of bail jurisprudence under the PMLA to interpret Section 45 of the PMLA in a manner that allows granting bail to the accused. In Pankaj Kumar Tiwari v. Enforcement Directorate, 2024 SCC OnLine Del 7387 (“Pankaj Kumar Tiwari case”), the Hon’ble High Court of Delhi has reiterated this jurisprudence that the provisions under Section 45 of the PMLA would have to be interpreted with due regard to right to life and liberty within Article 21 of the Constitution. The Court further emphasized that Section 45 of the PMLA cannot be used as a tool for prolonged undertrial incarceration.
Brief facts of the case
In Pankaj Kumar Tiwari case, the two main co-accused, who were promoters of a company, were alleged to have siphoned off funds, with the aid of other employees and associates through a complex web of corporate transactions. Further, the Serious Fraud Investigation Office (SFIO) contended that the principal co-accused individuals, under the pretence of obtaining credit facilities from banks, utilised forged documents to create fictitious orders, thereby committing fraud and misappropriating public funds. Two company associates, accused of helping the main suspects siphon funds, applied for bail. The Enforcement Directorate (ED) opposed this in the High Court.
Analysis by the court
While considering the rival submissions, the Court emphasised on the principle that bail is the rule, deriving the same from the right to life and liberty under Article 21 of the Constitution. Reliance was placed on a slew of recent judgements that upheld the right to speedy trial in PMLA cases. In Manish Sisodia v. Directorate of Enforcement[2], (“Manish Sisodia”), the Hon’ble Supreme Court emphasised on the fact that long incarceration when the trial is delayed, deprives the accused of their fundamental right to liberty and the same cannot be done. Similarly, in Prem Prakash v. Union of India[3], the Hon’ble Supreme Court expressed that the principle of bail being the rule and jail being the exception stems from the right to protect individual life and liberty under Article 21 of the Constitution and the same principle is applicable to PMLA cases. In V. Senthil Balaji v. The Deputy Director, Directorate of Enforcement[4], the Hon’ble Supreme Court has emphasised on the need to uphold constitutional safeguards in bail cases under the PMLA, given the effects of delay to the rights of the accused.The Court further observed that the investigation into the alleged offences was initiated in 2019 and the prosecution named 156 accused persons and cited 82 witnesses, which made the trial unlikely to conclude in the near future. It further held that Section 45 of the PMLA cannot be used as a tool to curtail the fundamental right to life and liberty of a person and in case of a conflict between Section 45 of the PMLA and Article 21 of the Constitution, Article 21 would prevail.
Therefore, the Court allowed the bail applications and held that the evidence linking the Applicants with the predicate offence was insufficient. The Court further delved into the twin conditions under Section 45 of the PMLA and reiterated its restrictive nature, while observing that they do not serve as an absolute bar on grant of bail, which depends on Court discretion.
Interplay between right to liberty and life under Article 21 and 45 PMLA
Granting bail to undertrial prisoners can be traced to Section 479 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”) (previously 436A of the Code of Criminal Procedure Code, 1973 (“CrPC”)), which mandates the release of undertrial prisoners that have undergone half of the maximum period of imprisonment specified for that offence under law. This provision was originally introduced in the CrPC to safeguard the right to speedy trial and facilitate liberty, which is the core intent of Article 21 of the Constitution, as observed in Satender Kumar Antil v. CBI [5]. To provide further relief to undertrial prisoners, especially first-time offenders, Section 479 of the BNSS mandates the release of first-time undertrial prisoners after completing one-third of the maximum period of imprisonment, instead of one-half of the maximum period of imprisonment.
The import of right to life and liberty in granting bail to an undertrial detained due to trial delays, especially when accused of offences under the special statutes, can be traced to Union of India v. K.A Najeeb[6], wherein the applicant was accused of committing an offence under the Unlawful Activities Prevention Act, 1967 (“UAPA”). UAPA is also known for its stringent bail conditions under Section 43D(5), but the accused was released on bail by the Division Bench of the Hon’ble Supreme Court, on account of his long incarceration period. The Courts have relaxed the stringent bail conditions under the PMLA, as seen in Ramkripal Meena v. Directorate of Enforcement[7] wherein bail was granted to the accused on account of long incarceration and prolonged trial. While Article 21 was not specifically cited in this case, since the Manish Sisodia judgment, right to life and liberty of an accused has been invoked to grant bail under PMLA. Various High Courts have granted bail to accused persons by relying on the Manish Sisodia judgment, such as – Hon’ble High Court of Delhi in Vaibhav Jain v. Enforcement Directorate[8] and Hon’ble High Court of Punjab in Jaswant Singh v. Directorate of Enforcement[9], thereby reaffirming the right to liberty within bail jurisprudence under the PMLA.The Courts have further imported Article 21 of the Constitution to state that a stay on orders that have granted bail must be given in rare and exceptional cases since the same curtails the right to liberty, as seen in Parvinder Singh Khurana v. Directorate of Enforcement [10].
Conclusion
The judgement in Pankaj Kumar Tiwari case reiterates the judicial view that in cases where bail may not be granted on merits of the twin conditions, mitigating circumstances such as the period of incarceration and pending trial can be taken into account for the purpose of granting bail. The reading of Article 21 of the Constitution in PMLA cases, is a welcome move, as it has resulted in relaxing the high threshold created by the existence of the twin conditions. Following the judgement of the Hon’ble Supreme Court in Manish Sisodia, there has been a surge in courts granting bail in light of prolonged trials in PMLA cases. A similar approach has been taken in Pankaj Kumar Tiwari, which has, in addition to reiterating the jurisprudence, held that Section 45 of the PMLA cannot be used as a tool for incarceration, guaranteeing liberty of the accused. This becomes pertinent, given the blatant misuse of the stringent provisions under PMLA to keep the accused in jail. However, a Division Bench of the Hon’ble Supreme Court in Rohee Tangappan Joseph v. Central Bureau of Investigation[11], raised questions on the practice of invoking a fundamental right guaranteed by Article 21 as ground for granting bail and observed that bail cannot be granted basis a straight-jacket formula. Given this observation, it would be interesting to witness the evolution of the jurisprudence and the interplay between Article 21 and the PMLA.
For further information, please contact:
Ankoosh Mehta, Partner, Cyril Amarchand Mangaldas
ankoosh.mehta@cyrilshroff.com
[1] Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1.
[2] 2024 SCC OnLine SC 1920.
[3] 2024 SCC OnLine SC 2270.
[4] (2024) 3 SCC 51.
[5] (2022) 10 SCC 51.
[6] (2021) 3 SCC 713.
[7] 2024 SCC OnLine SC 227.
[8] 2024 SCC OnLine Del 7478
[9] 2024:PHHC:143091
[10] 2024 SCC OnLine SC 1904.
[11] SLP(Crl) No. 005243.
