SC rejects rigid bail conditions under PMLA

The Supreme Court on Thursday struck down a stringent provision of the Prevention of Money Laundering Act 2002 (PMLA) that required an accused to prove his innocence for availing bail. The order came as a big blow to the Centre which sought to defend the provision claiming that it was a useful tool to punish black money hoarders.

Under the existing law, the special court trying PMLA cases granted bail only if there are no reasonable grounds for believing that the accused is not guilty of such an offence or that he is not likely to commit any offence while on bail.

Brushing aside the Centre’s objections, a Bench of Justices Rohington F Nariman and Sanjay Kishan Kaul declared Section 45(1) of PMLA as “unconstitutional” as it felt that the twin conditions imposed by this Section was an infringement of Article 21 (right to life and liberty) and Article 14 (right to equality).

Section 45(1) is applied to those charged for money laundering as well as scheduled offences under part A of the Act which are punishable with more than three years of prison sentence. Originally, part A covered cases involving waging of war against the Government of India and offences under the Narcotic Drugs and Psychotropic Substances (NDPS) Act. There was a Part B to which these bail conditions did not apply.

But by an amendment made in 2013, entire offences under Part B were shifted to Part A by which the draconian bail condition applied to offences under Wildlife (Protection) Act, Immoral Traffic (Prevention) Act, Prevention of Corruption Act, 1988, Antiquities and Arts Treasures Act, Securities and Exchange Board of India Act, Customs Act, Transplantation of Human Organs Act 1994, Emigration Act, Passports Act, Foreigners Act, Information Technology Act, and a host of other laws.

Going by the dictum in criminal law that one is innocent till proved guilty, the Bench said, “Section 45 is a drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence.”

Former Attorney General Mukul Rohatgi, who argued to strike off this provision pointed to the drastic consequences of this provision that forced an accused to reveal his defence to show he is not guilty at the stage of bail. Thus his trial was rendered meaningless, he added.

But on the other hand, Attorney General KK Venugopal urged the court to preserve the stringent provision of the Act in the interest of financial health of the economy. Though the Bench observed, “We should be very slow to set at liberty persons who are alleged offenders of the cancer of money laundering,” but went on to reopen all such cases where bail was denied to be re-heard by the respective courts at the earliest.

The Bench observed that a person may prove that there are reasonable grounds for believing that he is not guilty of the offence of money laundering but yet be denied bail as he is unable to prove reasonable grounds for believing that he is not guilty of the scheduled or predicate offence under Part A. “This would again lead to a manifestly arbitrary, discriminatory and unjust result which would invalidate the Section,” held Justice Nariman, writing for the Bench.

The judges spotted another anomaly in the provision as the twin conditions applied even to those accused who had nothing to do with the predicate offence and were only part of concealing, possessing, acquiring or using the proceeds of crime. The Bench said, “When it comes to Section 45, it is clear that a classification based on sentencing qua a scheduled offence would have no rational nexus with the grant of bail for the offence of money laundering.”