Section 45, PMLA - A Hotchpotch of Conditions That Make No Sense.

Bail is one of the cardinal rules in Criminal Law jurisprudence. It is a settled principle of law that bail is the rule and jail is the exception. The Hon'ble Supreme Court in Sanjay Chandra?v.?CBI[1] ?was pleased to hold that an Accused is better equipped to prepare his case when he is out on bail in the following words:

18.?“It makes sense to assume that a man on bail has a better chance to prepare or present his case than one remanded in custody. And if public justice is to be promoted, mechanical detention should be demoted.”

The Supreme Court has further laid down various pre-conditions that need to be satisfied for grant of bail in the very same judgement vide para 11 which are as follows:

?(a) The nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence.

(b) Reasonable apprehension of tampering with the witness or apprehension of threat to the complainant.

(c) Prima facie satisfaction of the court in support of the charge.

This article however, deals with some specific pre-conditions over and above the aforementioned pre-conditions that need to be satisfied for grant of bail under Prevention of Money Laundering Act, 2002 (hereinafter “PMLA”). Section 45 of PMLA primarily deals with conditions of grant of bail. However, the way this section has been drafted only suggests that it is nothing but a hotchpotch of clauses and conditions that make no sense whatsoever. Section 45 was amended in 2018 but before the said amendment, the conditions for bail stipulated therein used to apply only to the scheduled offences under Part A of the Schedule appended to PMLA, punishable with imprisonment of at least 3 years. The twin pre-conditions for granting bail under this section are:

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 offence and that he is not likely to commit any offence while on bail.

?Pre 2018 amendment, these conditions didn't apply to offences committed under PMLA viz. Money Laundering (The very offence this Act set out to punish). It also didn’t and even to this date doesn’t apply to scheduled offences in case of anticipatory bail because no bar is laid down as such for the accused to seek anticipatory bail in offences under this Act including the scheduled offences.

These conditions were challenged before the Hon'ble Supreme Court on account of violation of Articles 14 and 21 in Nikesh Tarachand Shah?v.?Union of India[2]. It was held that these conditions were indeed in violation of Articles 14 and 21 and were struck down on the following grounds:

1)?There is a presumption of guilt in the second condition in so far as the Court needs to satisfy itself that there are reasonable grounds for believing that the Accused is not guilty of the offence he is accused of. This is in direct contravention of presumption of innocence and is fundamentally detrimental to the Accused.

2) If the accused person is granted bail for a scheduled offence independent of PMLA proceedings but if a Special Court under the Act takes cognizance he would have to satisfy the two conditions for the same scheduled offence for which he is already out on bail.

3) There is absolutely no nexus between these conditions and the object that PMLA seeks to achieve i.e. punish the offence of money laundering when these conditions do not even apply to the offence of money laundering but only to the scheduled offence.

4) There is no provision under PMLA that bars the grant of anticipatory bail. This means that these conditions would not apply in an anticipatory bail proceeding but would apply in a regular bail proceeding. This is manifestly arbitrary, discriminatory and prejudicial to the Accused. ???

However, right after this judgement, the Legislature brought in an Amendment in 2018 to arguably overturn the judgement in Nikesh Tarachand Shah (Supra). In the said amendment all the offences under PMLA including scheduled offences were brought to the test of these two conditions. However, the Legislature didn’t seem to have applied their minds to the amendment at all; at best it might have been wishful thinking, assuming their intention was to negate the ratio in Nikesh Tarachand Shah (Supra). I arrive at this conclusion because the said amendment addresses only one of the grounds based on which these two pre-conditions were struck down. The other grounds still apply to the section and therefore it is no surprise that Delhi High Court in?Sai Chandrasekhar?Directorate of Enforcement[3], Patna High Court in?Ahilya Devi?v.?State of Bihar[4],?Manipur High Court in?Okram Ibobi Singh?v.?Directorate of Enforcement[5] and Madhya Pradesh High Court in?Vinod Bhandari?v. Director[6] were pleased to lay down that the 2018 Amendment has no bearing on the ratio laid down in Nikesh Tarachand Shah (Supra) and these two conditions remain unconstitutional. The Supreme Court also had the opportunity of examining the section post 2018 amendment in P. Chidambaram v. Directorate of Enforcement[7], however, the court went on to hold that conditions contained in S. 439 of CrPC shall apply without ever discussing the 2018 Amendment to S. 45. Now, this is where both the Legislature and the Supreme Court have seemed to opened a nasty Pandora’s Box because the jury is still out as to whether the 2018 Amendment negates the ratio in Nikesh Tarachand Shah (Supra); case in point being a judgement coming from Kerala High Court in M Sivasankar v. Union of India[8] which is as recent as January 25, 2021. The Kerala High Court opined that by virtue of the amendment to Section 45, the bail pre-conditions shall continue to apply, and shall not be affected by the Nikesh Tarachand Shah (Supra) decision.

Only Supreme Court can settle this now but at what cost one may think? All these litigants have been approaching various courts for bail as is clear from the aforementioned cases, with their liberty compromised and all the time and money that they lose during this tedious process. In fact, why just the litigants, the Courts’ precious time is also wasted when they are already burdened with a plethora of cases. All the confusion and chaos caused because when a section was being amended, nobody bothered to change a few more words to achieve their desired result. The CJI in his recent speech had rightly mentioned that now there is a sorry state of affairs at the Parliament.

P.S. The second proviso to section 45 doesn’t belong there and it makes no sense. It would be more suited as a proviso to Section 44 (1) (b) of PMLA, in my humble opinion. ?

[1] (2012) 1 SCC 40

[2] (2018) 11 SCC 1

[3] 2021 SCC OnLine Del 1081.

[4] Crl. Misc. No. 41413 of 2019.

[5] 2020 SCC OnLine Mani 365.

[6] 2018 SCC OnLine MP 1559.

[7] (2020) 13 SCC 791.

[8] Bail Application No. 7878 of 2020, January 25, 2021 (Kerala HC)