“The Right to Life and Personal Liberty is the most sacrosanct fundamental right guaranteed under Articles 20, 21 and 22 of the Constitution of India. Any attempt to encroach upon this fundamental right has been frowned upon by this Court.”

Through a series of judgments, beginning from Senthil Balaji case (August 7, 2023) to quashing of the remand order of Prabir Purkayastha (May 15, 2024), the Supreme Court has been finally able to introduce as well as cement the safeguard of providing grounds of arrest to an accused being arrested under the UAPA [Unlawful Activities (Prevention) Act, 1967] as well as the PMLA [Prevention of Money Laundering Act, 2002].

Arrest under these two stringent laws has led to a violations of many of the constitutional safeguards that had been put in place to protect the rights of the accused. These rights included the right of an accused to be provided information regarding the grounds of their arrest, based of which their legal counsel for challenge the arrest of the accused. However, while arresting under PMLA and UAPA, authorities would not provide the grounds of arrest to the accused, a practice which had not previously been made mandatory by the Supreme Court of India.

On May 15, the Supreme Court of India had declared the remand and arrest of Newsclick founder-editor Prabir Purkayastha to be “invalid in the eyes of the law”.  The Supreme Court bench of Justices BR Gavai and Sandeep Mehta had set aside and quashed the remand order issued against him, justifying his arrest and police custody, under the Unlawful Activities (Prevention) Act, 1967.

Notably, the impugned remand order had been passed against Purkayastha on October 4, 2023 by a special judge at the Patiala House court for seven days of police custody. The order was challenged by Purkayastha before the Delhi High Court on the grounds that the arrest was illegal and a gross violation of his fundamental rights under Articles 21 (protection of life and personal liberty) and 22(1) & (5) (right to be informed of grounds of arrest and right to be represented by a legal practitioner) of the Constitution.

On October 13, the Delhi High Court had upheld the said remand order. Pursuant to the same, Purkayashta had moved the Supreme Court.

The Supreme Court bench had, while quashing the remand order, pointed to procedural irregularities in the case. The order of the court was based on the reasoning that the copy of the remand application was not provided to the appellant or his counsel before passing the remand order on October 4, 2023.

While pronouncing the judgement, the bench noted that “There is no hesitation in the mind of the Court to reach to a conclusion that a copy of the remand application, in the purported exercise of the communication of the grounds of arrest in writing, was not provided to the accused-appellant or his counsel before the passing of the remand order dated 4th October, 2023, which vitiates the arrest and the subsequent remand of the appellant. As a result, the appellant is entitled to a direction for release from custody by applying the ration of the judgment rendered by this court in Pankaj Bansal.” (Para 50)

It is to be noted that Senior Advocate Kapil Sibal, representing Purkayastha, had relied heavily on Pankaj Bansal versus Union of India and Others (2023). In this judgment, interpreting Section 19(1) of the Prevention of Money Laundering Act, 2002, the Supreme Court had held that if the grounds of arrest are not furnished to the accused person at the time of his arrest and before remanding him to police custody, the continued custody of the accused is rendered grossly illegal and nullity in the eyes of law. The reasoning behind the same formed Article 22(1) of the Constitution, which provides that “No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice.”

In addition to this, the judgment delivered by the Supreme Court in the case of V. Senthil Balaji vs. The State represented by Deputy Director and others (August 7, 2023) also formed a foundational stone in the argument of ‘informing’ the arrested person of the grounds for his/her arrest. In Senthil Balaji case, the Supreme Court had noted that the information of the grounds of arrest should be ‘served’ on the arrestee. While the premise was set in the said case, the Court had not elaborated on that issue as the grounds of arrest were furnished in writing to the arrested person in that case.

With the aforementioned three cases, the Supreme Court has been able to cement, and also extend the requirement to cases filed under both UAPA and PMLA, requiring the authorities to supply the accused with ground of arrest. It is to be noted that in the matter of Senthil Balaji, who was arrested under PMLA, the Supreme Court had noted that there was an absence of consistent and uniform practice that was followed by the ED as written copies of the grounds of arrest are furnished to arrested persons in certain parts of the country but in other areas, that practice is not followed. The Court had also pointed to how discrepancy on a case-to-case basis also existed as in some cases the grounds of arrest are either read out to them, while in other cases the ground of arrest is being allowed to be read by them.

But, with the latest judgment of the Supreme Court in the Prabir Purkayastha, one main thing has been established- the provisions on the ground of arrest either under the Prevention of Money Laundering Act or the Unlawful Activities (Prevention) Act have the same constitutional source, i.e., Article 22(1) and must thus be uniformly construed.

Notably, the comparison between Section 19 of the PMLA and Section 43A and 43B of the UAPA was made by the court by holding that these two provided had the same requirement to communicate the grounds of arrest to the accused being arrested. In furtherance to this, the Court had also observed that both the aforementioned provisions find their source in the constitutional safeguard provided under Article 22(1) of the Constitution of India.

Grounds of arrest vs reasons for arrest: Prabir Purkayastha

In the said judgment of the Supreme Court, the bench has explained the difference between reasons for arrest and grounds of arrest. It is to be noted that it was the case of the accused that they had been arrested and provided with an arrest memo, which was in a computerised format and did not contain any column regarding the ‘grounds of arrest’ of the appellant.

The Court said that the grounds of arrest informed in writing must convey to the arrested accused all basic facts on which he was being arrested so as to provide him an opportunity of defending himself against custodial remand and to seek bail and thus, the ‘grounds of arrest’ would invariably be personal to the accused and cannot be equated with the ‘reasons of arrest’ which are general in nature.

“We find that the provision regarding the communication of the grounds of arrest to a person arrested contained in Section 43B (1) of the UAPA is verbatim the same as that in Section 19(1) of the PMLA.” (Para 18)

With this, the Court emphasised the need for the uniform application of those provisions which lay down the crucial constitutional safeguard, which finds its source under Article 22(1) of the Constitution of India, of providing the document of ground of arrest to the person arrested for committing an offence either under the PMLA or under the UAPA. In specific regards to the case of arrest and remand of Purkayastha, the Court had also rejected the submission of learned Additional Solicitor General that in a case of preventive detention, the grounds of detention need not be provided to a detenue in writing. The cold held the same to be “ex facie untenable in eyes of law”.

“Thus, we have no hesitation in holding that the interpretation of statutory mandate laid down by this Court in the case of Pankaj Bansal on the aspect of informing the arrested person the grounds of arrest in writing has to be applied pari passu to a person arrested in a case registered under the provisions of the UAPA.” (Para 19)

With the said judgment, the Supreme Court clarified every doubt regarding the supply of grounds of arrest in the writing to any person arrested on allegation of commission of offences under the provisions of UAPA. Notably, the court also held that a copy of such written grounds of arrest will also have to be furnished to the arrested person as a matter of course and without exception at the earliest.

“The purpose of informing to the arrested person the grounds of arrest is salutary and sacrosanct inasmuch as, this information would be the only effective means for the arrested person to consult his Advocate; oppose the police custody remand and to seek bail. Any other interpretation would tantamount to diluting the sanctity of the fundamental right guaranteed under Article 22(1) of the Constitution of India.” (Para 20)

In Purkayastha’s case, the Supreme Court also highlighted the procedural irregularities that took place during the entire exercise of Purkayastha’s arrest. Referring to the same as “a blatant attempt to circumvent the due process of law” the Supreme Court bench had pointed to the attempts by the authorities to confine the accused to police custody without informing him the grounds on which he has been arrested. As per the judgement, the act of depriving the accused of the opportunity to avail the services of the legal practitioner of his choice and not sending the chosen advocate the remand order and the grounds of arrest in a timely manner affected his right to oppose the prayer for police custody remand and seek bail.

“Hence, we have no hesitation in reiterating that the requirement to communicate the grounds of arrest or the grounds of detention in writing to a person arrested in connection with an offence or a person placed under preventive detention as provided under Articles 22(1) and 22(5) of the Constitution of India is sacrosanct and cannot be breached under any situation. Noncompliance of this constitutional requirement and statutory mandate would lead to the custody or the detention being rendered illegal, as the case may be.” (Para 30)

The complete judgment can be read here:

What did Delhi HC say on “grounds of arrest” in Purkayastha’s case?

It is essential to note that on October 13, 2023, the Delhi High Court had rejected the plea moved by Purkayashta against the remand order, by holding that the Supreme Court judgment in Pankaj Bansal case, directing ED to inform grounds of arrest in writing to the accused, cannot be said to be squarely applicable to a case arising under UAPA. Notably, Justice Tushar Rao Gedela had held that under UAPA, the grounds of arrest need to be informed to the arrestee within 24 hours of such arrest, however furnishing of such grounds in written are not mandated under the enactment. The same judgment had then been entirely overturned in the Supreme Court. Let’s look at what the Delhi HC had observed on the applicability of Pankaj Bansal case:

According to High Court, the Preamble and aims and objects of PMLA are to prevent the offence of money laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Holding that the PMLA is an enactment for maintaining the internal law and order in relation to financial crimes, the High Court observed that the sensitivity of the information/intelligence being gathered by the investigating authorities under the UAPA is of a greater significance having direct impact on the issues relating to national security. In view of the same, the Court stated that the ratio laid down by the Court of providing grounds of arrest to the accused in writing in the Pankaj Bansal case, which concerned PMLA, will not be applicable to UAPA.

“Thus, the ratio laid down by the Supreme Court in Pankaj Bansal (supra) while relying upon V. Senthil Balaji (supra) which was purely in relation to the provisions of PMLA cannot, by any stretch of imagination, be made applicable, mutatis mutandis, to the cases arising under UAPA.” (Para 8)

“So far as the UAPA is concerned, no such similar statutory obligation is cast upon the authorities under the provisions of section 43A & 43B and thus, the ratio of the Supreme Court in Pankaj Bansal (supra) cannot be said to be squarely applicable to a case arising under the provisions of UAPA.” (Para 9)

The complete judgment can be read here:

Cases that formed the basis of the Supreme Court judgement?

1. Pankaj Bansal v Union of India

The Supreme Court of India had ruled that merely reading out the grounds of arrest by the Enforcement Directorate to an arrested person is not compliant with the procedure enshrined under the PMLA as well as the Constitution of India.

Brief facts of the case: An FIR was registered by the Anti-Corruption Bureau, Panchkula, Haryana, under the Prevention of Corruption Act, 1988 read with Section 120-B of the Indian Penal Code, 1860 for the offences of corruption, bribery and criminal conspiracy against certain accused persons, including the M3M Group and one of its promoters. The Appellants, Pankaj Bansal and Basant Bansal were promoters/directors in the M3M Group. However, they were not named as an accused in the FIR or in the enforcement case information report (ECIR) recorded by the ED.

When ED raided the properties, seized bank accounts of M3M group and arrested one of the accused persons, the Appellants, apprehending arrest, secured interim protection from the Delhi High Court by way of an anticipatory bail. The ED approached the Supreme Court assailing the protection granted by the Delhi High Court. In the meantime, the ED recorded another ECIR against the same accused persons. However, yet again, the Appellants were not named accused in the second ECIR as well. Thereafter, the ED issued summons to the Appellants to appear. Whilst the Appellants were present at the ED office on the said date, Pankaj Bansal was served with fresh summons in connection with the second ECIR to appear before another investigating officer on the same day.

Subsequently, the Appellants were arrested on the same day in terms of Section 19 of the PMLA and then taken to the Vacation Judge/Additional Sessions Judge, Panchkula. There, they were served with the remand application filed by the ED. The Vacation Judge passed an order granting custody to the ED for five days, which was later extended and thereafter they were sent to the judicial custody. Feeling aggrieved, the Appellants filed writ petitions before the Punjab and Haryana High Court, which were dismissed. The Appellants challenged the decisions of the Punjab and Haryana High Court by filing criminal appeals before the Supreme Court.

Decision of the court regarding grounds of arrest: The Supreme Court noted that Section 19 of the PMLA, under which the appellants were arrested does not specify in clear terms as to how the arrested person is to be ‘informed’ of the grounds of arrest. Thus, the Court emphasised for there to be proper compliance of Article 22(1) of the Constitution which provides that no person who is arrested will be detained in custody without being informed, as soon as may be, of the grounds for such arrest, it is also important that the mode of conveying the grounds must be meaningful.

The Supreme Court further analysed the twin conditions set out under Section 45 of the PMLA, under which an arrested person could be allowed to seek release on bail. Notably, as per Section 45 of the PMLA, bail can only be granted when the court is satisfied that there are reasonable grounds to believe that the arrested person is not guilty of the offence, and that the arrested person is not likely to commit any offence while on bail.

Emphasising upon the strict and narrow nature of the bail conditions under PMLA, the Supreme Court held that it would be essential for an arrested person to know the grounds of arrest in order for him/her to be a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. Through the case of Pankaj Bansal, the Court established that communication of the grounds of arrest, as mandated by Article 22(1) of the Constitution and Section 19 of the PMLA, is meant to serve this higher purpose and must be given due importance.

Furthermore, the Court had also pointed to the disparate procedure being adopted by the ED in informing the grounds of arrest to the accused. Consequently, the Supreme Court observed that furnishing written grounds of arrest to an arrested person would be the advisable course of action as it would be in line with the constitutional obligations put on the authorities. The Court also noted that a mere oral recitation of the grounds of arrest would lead to the word of the arrested person being put up against the word of the authorized officer as to whether or not there is due and proper compliance in this regard, which would defeat the whole purpose of the arrest.

In view of the above, the Supreme Court then ruled that a copy of the written grounds of arrest must be furnished as a matter of rule and not exception, thereby ensuring due compliance of the mandate prescribed under Article 22(1) of the Constitution and Section 19 of the PMLA.

The complete judgment can be read here.

2. Senthil Balaji v the State represented by Deputy Director and Ors.

In the said case, the Supreme Court had held that any non-compliance of the mandate of Section 19 of the PMLA, which gives the authorities to exercise their power of arrest, would vitiate the very arrest itself. The Court had also held that such non-compliance would give benefit to the person arrested.

Brief Background of the case: A case was registered in the ECIR by the State against Tamil Nadu minister V Senthil Balaji in 2021 in connection with the cash-for-jobs scam. It was followed by a summons requiring his attendance in August 4, 2021 and October 07, 2021. A search was conducted by the Authorised Officer invoking Section 17 of the Prevention of Money Laundering Act, 2002 at Senthil Balaji premises on June 13, 2023.

Citing non-cooperation by Balaji, the authority then invoked Section 19 of the PMLA by way of an arrest on June 14, 2023. It is noted that though grounds of arrest were furnished, Senthil Balaji had declined to acknowledge them. The information pertaining to the arrest was also intimated to his brother, sister-in-law and wife. Senthil Balaji was taken to the Tamil Nadu Government Multi Super Speciality Hospital, as he complained of chest pain. His wife rushed to the High Court and filed a Habeas Corpus petition on the very same day. After the said plea was dismissed by the High Court, the petition had been moved to the Supreme Court.

While arguments were being made in the Supreme Court in the Habeas Corpus petition, Balaji had stated that ED has not communicated the grounds of arrest to him, which would hold his arrest to be illegal. As submitted by Balaji, the grounds of arrest document and the Arrest Memo had conflicting stance. Balaji had also contended that the High Court had committed a serious error in rejecting the submission of the Petitioner with regard to non-communication of grounds of arrest.

Decision of the court regarding supply of grounds of arrest: While dismissing the writ of Habeas Corpus filed in this case, the Supreme Court had clarified in the judgment that any non-compliance of the authorities with the safeguards provided in Section 19 of the PMLA would vitiate the very arrest itself.

“To effect an arrest, an officer authorised has to assess and evaluate the materials in his possession. Through such materials, he is expected to form a reason to believe that a person has been guilty of an offence punishable under the PMLA, 2002. Thereafter, he is at liberty to arrest, while performing his mandatory duty of recording the reasons. The said exercise has to be followed by way of an information being served on the arrestee of the grounds of arrest. Any non-compliance of the mandate of Section 19(1) of the PMLA, 2002 would vitiate the very arrest itself. Under sub-section (2), the Authorised Officer shall immediately, after the arrest, forward a copy of the order as mandated under sub-section (1) together with the materials in his custody, forming the basis of his belief, to the Adjudicating Authority, in a sealed envelope. Needless to state, compliance of sub-section (2) is also a solemn function of the arresting authority which brooks no exception.” (Para 39)

In addition to this, the Supreme Court had also held it to be the duty of the Magistrate to ensure that the authorities duly follow the process that is laid down under the PMLA as well as the constitutional safeguards put in place.

“Such a Magistrate has a distinct role to play when a remand is made of an accused person to an authority under the PMLA, 2002. It is his bounden duty to see to it that Section 19 of the PMLA, 2002 is duly complied with and any failure would entitle the arrestee to get released. The Magistrate shall also peruse the order passed by the authority under Section 19(1) of the PMLA, 2002. Section 167 of the CrPC, 1973 is also meant to give effect to Section 19 of the PMLA, 2002 and therefore it is for the Magistrate to satisfy himself of its due compliance. Upon such satisfaction, he can consider the request for custody in favour of an authority, as Section 62 of the PMLA, 2002, does not speak about the authority which is to take action for non- compliance of the mandate of Section 19 of the PMLA, 2002. A remand being made by the Magistrate upon a person being produced before him, being an independent entity, it is well open to him to invoke the said provision in a given case. To put it otherwise, the Magistrate concerned is the appropriate authority who has to be satisfied about the compliance of safeguards as mandated under Section 19 of the PMLA, 2002.” (Para 68)

The complete judgment can be read here.

Related:

Examining Jurisprudential Shifts: The Evolution of Bail Provisions Under PMLA – Part II”

Supreme Court on PMLA: Section 120(B) of the IPC can’t be invoked by ED when criminal conspiracy not linked to schedule offence

Madras HC: Legal bar on ED’s detention, split verdict, PMLA case against Senthil Balaji

After spending 7 months behind bars, Supreme Court declares the arrest and remand of NewsClick founder Prabir Purkayastha illegal!

The post Prabir Purkayastha Case: Mandate of providing grounds of arrest to PMLA/UAPA accused, some safeguards appeared first on SabrangIndia.

In the past one and half year constitutional courts have ruled inconsistently over the interpretation of important provisions under PMLA, specifically regarding Section 45 and Section 19 of the law. Due to its stringent bail conditions, PMLA is often compared with draconian Unlawful Activities (Prevention) Act, 1967.

Section 45 of the PMLA states that no person accused of an offence under the said Act shall be released on bail or on his own bond unless— “(i) the Public Prosecutor has been given the 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…” (Known as twin conditions).

Section 19 of the PMLA provides that “(1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.”

“(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.”

The analysis of the court judgements reveal that judges have used varied interpretations to grant or reject bail applications of the accused, citing reasons ranging from “seriousness of offences” to “broad probability” and from procedural technicalities to constitutional safeguards.

Relevant judgements in 2023-24

Directorate of Enforcement vs. Aditya Tripathi (Criminal Appeal No. 1402 of 2023)

In this case ED had moved an application to the Supreme Court, appealing against the order of the Telangana High Court which had granted bail to the respondent Aditya Tripathi in the case of PMLA. The Telangana High Court had reasoned that since the chargesheet had been filed and investigation in the predicate offences was complete, the investigation should be deemed complete, and once the investigation is complete the possibility of tempering with the evidence or influencing witnesses is unlikely.

Tripathi was booked under Sections 120-B (criminal conspiracy), 420 (cheating), 468 (forgery) and 471 (fudging) of the Indian Penal Code (IPC) and Section 7 read with Section 13(2) of the Prevention of the Corruption Act (PC). ED had found that e-tenders for total works amounting to Rs. 1769.00 crores of Madhya Pradesh Water Corporation were tempered to change the price bid of M/s GVPR Engineers Limited, M/s The Indian Hume Pipe Company Limited and M/s IMC Project India Limited to make them the lowest bidders.

The Supreme Court bench of Justices M R Shah and C T Ravikumar delivered its verdict on May 12, 2023, setting aside the Telangana High Court judgment which had granted bail to the accused Aditya Tripathi in the PMLA case. Delivering the judgement for the bench, Justice M R Shah noted that “enquiry/investigation” is still going on by the Enforcement Directorate for the scheduled offences in the case and once the enquiry/investigation against the accused is ongoing, the rigour of Section 45 (twin conditions) of the PMLA is required to be considered. Justice Shah said that the High Court did not consider the “nature of allegations”, “rigour of Section 45” of PMLA, and “seriousness of the offences alleged of money laundering” and the offences under the PMLA. The judgment also noted that merely because other accused are discharged/acquitted, it cannot be a ground not to continue the investigation in respect of the present accused.

Importantly, as it overturned the Telangana High Court ruling, the bench maintained that “it appears that what is weighed with the High Court is that chargesheet has been filed against respective respondent No. 1 – accused and therefore, the investigation is completed. However, the High Court has failed to notice and appreciate that the investigation with respect to the scheduled offences under the PML Act, 2002 by the Enforcement Directorate is still going on. Merely because, for the predicated offences the chargesheet might have been filed it cannot be a ground to release the accused on bail in connection with the scheduled offences under the PML Act, 2002. Investigation for the predicated offences and the investigation by the Enforcement Directorate for the scheduled offences under the PML Act are different and distinct. Therefore, the High Court has taken into consideration the irrelevant consideration.”

The relevant judgement may be read here:

Vijay Agrawal through Parokar vs. Directorate of Enforcement (Bail Application no. 1762/2022)

The case against Indore-based builder Vijay Agrawal was registered by the ED under PMLA and the builder was accused of being a conduit in a series of Hawala transactions, obtaining loans from the shell companies, fraudulently transferring shares of the company and engaging in land development with the purpose of whitewashing the money and properties obtained through illegal and fraudulent means. The accusations against Agrawal were linked with the co-accused Bimal Jain, who was accused of rotating funds approximately to the tune of Rs. 96,000 crores for providing accommodation entries of approximately Rs. 18,679 Crores to 973 beneficiaries. Specific accusations against Agarwal noted that he acquired 50% shares of the company belonging to main accused persons at a price of Rs.5lakh, the actual valuation of which was Rs.18 crores and therefore, the petitioner was in receipt of proceeds of crime in the sum of Rs.17,95,00,000/; the second allegation alleged that he acquired certain loans from the shell companies; and thirdly, the proceeds of crime was laundered through M/s R.C. Warehousing where he was in a managerial position. Agarwal in his defence had claimed that he did not knew that the money which were transferred, allegedly for performing business obligations, were derived through the proceeds of crime and therefore he cannot be held guilty under the Act.

In the judgement delivered on May 29, 2023, the Delhi High Court judge Dinesh Kumar Sharma granted bail to the accused on the basis of “broad probability” in the favour of the accused. In his verdict Justice Sharma said that “despite the twin conditions, the court cannot return any finding merely on the basis of inferences and presumptions.” Citing the landmark Vijay Madanlal Choudhary judgement, which had practically given unbridled powers to the ED, the judge noted that “even at the stage of bail, the court is expected to consider the question from the angle as to whether the accused possessed the requisite mens rea.” After considering the submission of Agrawal that he has till date not received any money rather, has given a security of Rs.21 lakhs, Justice Sharma said “his plea that he did not know that he is dealing with the tainted money cannot be brushed aside mechanically. The evidentiary value of the statement recorded under Section 50 of PMLA has to be tested at the end of the trial and not at the stage of bail. The twin conditions of Section 45 do not put an absolute restrain on the grant of bail or require a positive finding qua guilt.” The verdict also noted that since the purpose of evidence cannot be meticulously examined at this stage, “the Court cannot merely proceed on the basis of assumption. There has to be some substantial link between the money received and criminal activity relating to scheduled offence which can be attributed to the petitioner.”

Thus, the bail was granted on the basis of the principle of broad probabilities and as the accused was seen fulfilling three bail conditions, namely, (lack of) possibility of tampering with evidence and cooperation with the investigative agency, flight risk, and deep root to society.

The relevant judgement may be read here: 

Pankaj Bansal vs. Union of India (Criminal Appeal Nos 3051-3052 of 2023)

While the Pankaj Bansal judgement is on the legality of arrest under Section 19 of the PMLA rather than on the question of bail per se, it became one of the most cited judgements to argue in favour of the accused, often to highlight the illegality of the arrest and seek recourse to constitutional remedy.

The judgement delivered by the bench of AS Bopanna and Sanjay Kumar on October 3, 2023, the court said that “to give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception.” Initially, it was in the case of V. Senthil Balaji vs. The State represented by Deputy Director and others that the court emphasised on providing the grounds of arrest to the accused booked under PMLA, but it was Pankaj Bansal judgement that developed the jurisprudence and added more weight and clarity to the legality of the arrest.

In the present case, the accused was merely informed of his grounds of arrest, which itself remains contested claim, without providing him the copy of the grounds of arrest. The verdict said that “ED’s Investigating Officer merely read out or permitted reading of the grounds of arrest of the appellants and left it at that, which is also disputed by the appellants. As this form of communication is not found to be adequate to fulfil compliance with the mandate of Article 22(1) of the Constitution and Section 19(1) of the Act of 2002, we have no hesitation in holding that their arrest was not in keeping with the provisions of Section 19(1) of the Act of 2002.” Thus, the apex court set aside the previous orders of the Division Bench of the Punjab and Haryana High Court, Additional Sessions Judge (Panchkula), arrest orders and arrest memos, and ordered the release of the petitioners.

Notably, the review petition filed by ED against the judgment was dismissed by the Supreme Court on March 20, 2024.

The relevant judgement may be read here:

The order dismissing the review petition can be read here:

Ram Kishor Arora vs. Directorate of Enforcement (Criminal Appeal No. 3865 of 2023)

In this case, the accused had moved to the apex court, arguing that his arrest was illegal as he was not provided the copy of the grounds of arrest at the time of his arrest. In the verdict delivered on December 15, 2023 by the bench of Justices Bela Trivedi and Satish Chandra Sharma, the court refused to grant relieve to the petitioner. The petitioner in the case, Ram Kishor Arora, alleged that his was “illegal and violative of the fundamental rights guaranteed to the appellant under Articles 14, 20 and 21 of the Constitution of India”. As per the facts of the case, ED had handed over the document containing the grounds of the arrest to Arora and took it back after obtaining his endorsement and signature, as a token of him having read the same, without furnishing a copy the document to Arora at the time of arrest. The petitioner relied on Pankaj Bansal judgement to argue that his arrest was illegal as he was not given the copy of the grounds of arrest but was merely allowed to read the grounds from the document without getting a copy of the same. The Enforcement Directorate (ED) countered the argument and said that the ratio of Pankaj Bansal would not apply to the case at hand as the accused was provided the document to read the grounds of arrest and his signature was taken on the document as a proof that he had read the grounds of arrest, irrespective of the fact that he was not provided the copy of the document.

Justice Trivedi in her verdict said that “the expression “as soon as may be” contained in Section 19 of PMLA is required to be construed as- “as early as possible without avoidable delay” or “within reasonably convenient” or “reasonably requisite” period of time.” The expression “as soon as may be” was interpreted by the bench to mean twenty-four hours of the arrest. Relying on Vijay Madanlal Choudhary, the bench held that “it has been categorically held that so long as the person has been informed about the grounds of his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution.” The verdict also said that the word “henceforth” in Pankaj Bansal judgement implied that “requirement of furnishing grounds of arrest in writing to the arrested person as soon as after his arrest was not the mandatory or obligatory till the date of the said judgment.” Furthermore, citing the rule of precedent, the bench critiqued Pankaj Bansal judgement delivered by the two-judge bench, noting that “any observation made…by the Division Bench of lesser number of Judges contrary to the said ratio laid down in Vijay Madanlal Choudhary (supra) would be not in consonance with the jurisprudential wisdom…” The bench disposed of the petition recording that “we hold that there was due compliance of the provisions contained in Section 19 of PMLA and his arrest could neither be said to be violative of the said provision nor of Article 22(1) of the Constitution of India.”

The relevant judgement may be read here:

Prem Prakash vs. Union of India (Special Leave to Appeal (Crl.) No(s). 691/2023)

In this case, the petitioner Prem Prakash had approached the apex court pleading for his release on bail as he was charged under PMLA and put behind bars as an undertrial prisoner for more than a year and half. While no specific judgment has been delivered in this case, the apex court in its March 20, 2024 order observed that it will examine whether the petitioner should be granted interim bail as he has been in custody for over eighteen months. The order holds significance as the SC recognises long incarceration as one of the potential grounds for granting bail to the accused charged under stringent PMLA law.

The relevant judgement may be read here:

Sanjay Singh vs. Directorate of Enforcement (Crl.A.@SLP(Crl.) 2558/2024)

On April 2, 2024, the Supreme Court bench of Justices Sanjiv Khanna, Dipankar Datta and P B Varale passed an order granting bail to Aam Aadmi Party leader Sanjay Singh who was booked under PMLA in the case of alleged excise policy scam. As the bench passed the order granting bail, it noted that no illegal money has been recovered from Sanjay Singh, there is no money trail to link him to any proceeds of crime, and the investigative agency ED has not opposed his bail plea, as its reasons for granting bail to the accused. Notably, the bench had asked ED, “He has been in custody for six months. We need to know if further custody is required or not”. ED in its response said that the custody was no longer required, without arguing the case on merits. The ED in this case is understood to have made a strategic move by not opposing the bail plea of Sanjay Singh, as the Section 45 of PMLA relating to bail provision states that when granting a bail “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…”.

The relevant judgement may be read here:

Tarsem Lal vs. Directorate of Enforcement (Jalandhar Zonal Office) (Criminal Appeal No.2608 of 2024)

The latest judgement by the Supreme Court in the case of Tarsem Lal provides a significant relief to accused under PMLA, as the court ruled that the accused need not meet the strict criteria for bail under Section 45 of the PMLA when they voluntarily appear before the special court following the ED complaint. In their verdict delivered on May 16, 2024, the bench of Justices Ujjal Bhuyan and AS Oka said that “After cognizance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44 (1)(b), the ED and its officers are powerless to exercise power under Section 19 to arrest a person shown as an accused in the complaint; and If the ED wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, the ED will have to seek custody of the accused by applying to the Special Court.” Furthermore, the verdict states that “After a summons is issued under Section 204 of the CrPC on taking cognizance of the offence punishable under Section 4 of the PMLA on a complaint, if the accused appears before the Special Court pursuant to the summons, he shall not be treated as if he is in custody. Therefore, it is not necessary for him to apply for bail. However, the Special Court can direct the accused to furnish bond in terms of Section 88 of the CrPC.”

The apex court in this case provided relief to the petitioner Tarsem Lal as it set aside the orders of the High Court of Punjab and Haryana declining his anticipatory bail and cancelled the warrants issued by the Special Courts against the accused.

The relevant judgement may be read here:

Related:

PMLA Bail Conditions: Relaxation for Women, Sick & Infirm | CJP

ED a ‘vengeful complainant’: Mumbai PMLA court

‘Essence of Tyranny is Harsh Laws Used Selectively Against Opponents’—Sanjay Hegde

Enforcement Directorate raids activist Harsh Mander’s home, orphanage, offices

The post Examining Jurisprudential Shifts: The Evolution of Bail Provisions Under PMLA – Part II” appeared first on SabrangIndia.

In its judgment, the court held that “An offence punishable under section 120-B will become a scheduled offence only if the conspiracy alleged is of committing an offence specifically included in the schedule.” (Para 27)

The Supreme Court also laid down that a person accused of an offence under Section 3 of the Prevention of Money Laundering Act (PMLA), which captures all processes and activities linked to the proceeds of crime- whether directly or indirectly, need not necessarily be shown as an accused in the scheduled offence. The judgment clarified that a person, unconnected to the scheduled offence but knowingly assisting in the concealment of the proceeds of crime, can be held guilty of committing an offence under Section 3 of the PMLA.

“It is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary supports the above conclusion. The conditions precedent for attracting the offense under Section 3 of the PMLA are that there must be a scheduled offense and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of subsection (1) of Section 3 of the PMLA,” the Supreme Court bench held. (Para 15)

The Supreme Court bench comprising Justices Abhay S. Oka and Pankaj Mithal pronounced the aforementioned judgment in an appeal against a judgment of the Karnataka High Court which refused to quash the proceedings in a case pending before Special Judge, Bengaluru for the offence of money laundering against the appellant under PMLA. The Supreme Court bench quashed and set aside the order of the High Court and quashed the complaint pending before the Special Court, Bengaluru. 

The present case:

On March 7, 2022, a complaint had been filed by the Enforcement Directorate (ED) against the former Vice-Chancellor of Alliance University, Pavana Dibbur. The ED has charged her under sections 44 and 45 of the Prevention of Money Laundering Act (PMLA), citing offenses defined under section 3 read with sections 8(5) and 70, which are punishable under section 4 of PMLA.

The allegations suggested that during her tenure as VC of Alliance University from 2014 to 2016, the appellant acquainted with Madhukar Angur (Accused no.1), conspired to execute a sham and nominal sale deed without any consideration, involving properties belonging to Alliance University. It was further claimed that she facilitated Accused No. 1 in using her bank accounts to conceal money siphoned from the university. Here, the FIR in the predicate offence were registered under Sections 143 (unlawful assembly), 406 (Criminal breach of trust, 407 (Criminal breach of trust by carrier), 408 (Criminal breach of trust by clerk or servant), 409 (Criminal breach of trust by public servant, or by banker, merchant or agent.), 149 (common object of unlawful assembly) of the IPC.

On March 17, 2022, the Special Court for PMLA cases in Bengaluru took cognizance of the allegations made against Dibbur and the Special Judge proceeded with the case. In response to the same, the petitioner approached the Karnataka High Court, seeking to quash the proceedings under Section 482 of the Criminal Procedure Code (CrPC).

However, the High Court dismissed the petition for quashing the complaint moved by Dibbur. The High Court relied on the judgment declared by the Supreme Court in Vijay Madanlal Choudhary v. Union of India & Ors., and emphasized that the phrase used by the Court in its judgment is “any person” and not “any accused.” Therefore, one need not be accused in the principal offense to be subject to proceedings under the Act. The court further held that even assisting in the process or activity constitutes a part of the crime of money laundering. 

The present appeal was filed by the appellant in the Supreme Court against the said judgment of the High Court. 

Submissions by the parties:

Appellants: During the hearings, it was argued by Senior Advocate Meenakshi Arora, representing the appellant, that her client was neither named in the FIR nor in the subsequent charge sheet. As provided by the counsel, the appellant had only been arraigned as an accused for the first time in a complaint under sections 44 and 45 of PMLA.

It was further submitted by advocate Arora that proceeds of crime must be derived from criminal activity related to a scheduled offence. For this, the counsel had relied on the judgment delivered in the Vijay Madanlal Chowdhury case. The third argument that was raised by advocate Arora was that Section 120-B of the IPC cannot stand alone, emphasizing the need for a conspiracy to commit an illegal act mentioned in the scheduled offences under Section 2(y) of PMLA. Through this, the counsel had brought forth the question on whether Section 120-B of the IPC can be utilized independently by authorities under PMLA for investigation or if it must be read together with other scheduled offenses. Based on the aforementioned submissions, it was urged by advocate Arora that the complaint against the appellant deserved to be quashed.

Respondents- the Additional Solicitor General SV Raju was representing ED in the present hearings. It was contended by him that the PMLA is an independent code, and a person who is not named in the FIR can be arraigned as an accused. Further, the ASG submitted that a person can be held guilty of the commission of a money laundering offence under Section 3 of the PMLA even if they are not shown as an accused in the predicate offence.  

As provided in a report of LiveLaw, during the hearing, the Court had posed a hypothetical scenario to the ASG and asked “If there is a theft of 100 crores and there is no scheduled offense other than 120-B, then will the authorities under PMLA have the power to initiate the prosecution?” to the same, the ASG had responded by stating that the authorities would rightfully have the power to investigate the offense, citing Section 120-B as a scheduled offense under Section 2(y) of the PMLA Act.

What are the scheduled offences annexed to the PMLA?

The PMLA has listed scheduled offence in the Schedule annexed to it. The Schedule comprises Part A, Part B and Part C.

Part A enlists numerous offences under the IPC, Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985 and other statutes. Certain serious offences such as those connected with waging war against the Nation, circulation of Fake Indian Currency Notes, etc. have been included in this.

Part B of the Schedule includes only one offence under Section 132 of the Customs Act, 1962. The offence under Section 132 of the Customs Act, of making a false declaration, etc., becomes a scheduled offence in view of the sub-clause (ii) of clause (y) of sub-section (1) of Section 2 of the PMLA only if the total value involved in the offence is ₹1 crore or more.

Part C of the Schedule provides that any offence specified in Part A having cross-border implications becomes a part of Part C.

In the present case, ASG Raju argued that even though the charge involved a criminal conspiracy to commit an offence not covered by the Schedule, the offence became scheduled because Section 120¬B of the IPC is included in Part A of the PMLA Schedule.

Observations by the Supreme Court:

On scheduled offences: The Supreme Court bench rejected the argument of the ED that the “scheduled offence” under Section 120B (criminal conspiracy) would apply even if there were no other scheduled offences in the charge sheet, deeming it a violation of the legislative intent behind the PMLA. The bench held that if the aforementioned argument of the ED were to be accepted by the Court, the Schedule to the PMLA would become redundant and meaningless. The Bench also warned that the interpretation suggested by the ED may attract the vice of unconstitutionality for being manifestly arbitrary. 

“If we accept such an interpretation, the statute may attract the vice of unconstitutionality for being manifestly arbitrary,” stated the court in para 25 of the judgment. 

Upon this, the Bench pointed out that many offences under Chapter XVII (offence against property) of the IPC are not included in Parts A and B of the PMLA Schedule. They become scheduled offences, the Bench noted in para 22 of the judgement, only if they have cross-border implications.

“As stated earlier, many offences under Chapter XVII of the IPC are not included in Parts A and B.  They become scheduled offences only if the same have cross-border implications. Thus, the offences of dishonest misappropriation of property or criminal breach of trust or theft can become a scheduled offence, provided they have cross-border implications.”

The bench then cited an example to highlight the fallacy of the ED’s argument “If the argument of the learned Additional Solicitor General is accepted, if there is a conspiracy to commit offences under Section 403 or Section 405, though the same have no cross-border implications, the offence under Section 120B of conspiracy to commit offences under Sections 403 and 405 will become a scheduled offence,” the Bench stated in Para 22 of the judgment. In other words, the bench stated that as per the argument of ED, any offence is not included in Parts A, B and C of the Schedule but if the conspiracy to commit the offence is alleged, the same will become a scheduled offence.

In furtherance to this, the Bench gave another illustration to emphasise the effect that the argument of the ED will have on the working of PMLA. The Bench noted that a crime punishable under Section 132 of the Customs Act is made a scheduled offence under Part B, provided the value involved in the offence is ₹1 crore or more. But if Section 120B of IPC is applied, if the ED’s argument were to be accepted, one who commits such an offence having a value of even ₹1 lakh can be brought within the purview of the PMLA.

The bench then observed that “By that logic, a conspiracy to commit any offence under any penal law which is capable of generating proceeds can be converted into a scheduled offence by applying Section 120B of the IPC, though the offence is not a part of the Schedule,” (Para 22)

Interpretation of the PMLA in this manner could not be the intention of the legislature, the Bench thus held. 

On Section 120 B of the IPC not being an aggravated offence- Further in the judgment, in regards to Section 120B of the IPC, the divisive bench opined that merely because there is a conspiracy to commit an offence, the same does not become an aggravated offence.

“If we look at the punishments provided under Section 120B, it becomes evident that it is not an aggravated offence. It only incorporates the principle of vicarious liability.” (Para 25)

Furthering this, the bench stated that interpretation suggested by the ED will defeat the legislative object of making only a few selected offences as scheduled offences and held “If no specific punishment is provided in the statute for conspiracy to commit a particular offence, Section 120B treats a conspirator of the main accused as an abettor for the purposes of imposing the punishment,” the Bench said.

Decision of the Supreme Court: 

The bench of the Supreme Court then observed that the conditions precedent for attracting the offense under Section 3 of the PMLA is that it requires the presence of a scheduled offense and the existence of proceeds of crime related to the scheduled offense, which were absent in the present case. Hence, the Court held that the appellant cannot be prosecuted for the offenses punishable under Section 3 of the PMLA.

It is crucial to highlight here that the bench also made an essential observation and held that that if the prosecution for the scheduled offense concludes with the acquittal or discharge of all the accused, or if the proceedings of the scheduled offense are entirely quashed, the scheduled offense ceases to exist. In such cases, individuals cannot be prosecuted for the offense punishable under Section 3 of the PMLA since there would be no proceeds of crime.

However, the court made it clear that an accused in a PMLA case, who becomes involved after the commission of the scheduled offence by assisting in the concealment or use of proceeds of crime, does not need to be an accused in the scheduled offence. Such individuals can still be prosecuted under the PMLA as long as the scheduled offense exists.

“Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will benefit from the acquittal of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence. Similarly, he will get the benefit of the order of quashing the proceedings of the scheduled offence,” the Court observed.

Thus, the court concluded that while they rejected the contention that Section 120B would apply even if there were no other scheduled offences in the charge sheet it concluded, the submission that the appellant needed not necessarily be an accused in the scheduled offense was upheld. The judgment clarified that a person, unconnected to the scheduled offence but knowingly assisting in the concealment of the proceeds of crime, can be held guilty of committing an offence under Section 3 of the PMLA.

The complete judgment can be read here:

Related:

Madras HC: Legal bar on ED’s detention, split verdict, PMLA case against Senthil Balaji

Arrest of Shiv Sena MP, Sanjay Rautt a ‘Witchunt’ & ‘Illegal’ says PMLA Court granting him bail in Money Laundering case

Women, Sick & Infirm may get bail under PMLA: Delhi HC

ED a ‘vengeful complainant’: Mumbai PMLA court

Rajasthan High Court: ED summons against Congress candidate in the midst of electioneering, quashed

The post Supreme Court on PMLA: Section 120(B) of the IPC can’t be invoked by ED when criminal conspiracy not linked to schedule offence appeared first on SabrangIndia.

In a suit filed against him under the Prevention of Money Laundering Act, the Lucknow bench of the Allahabad High Court granted journalist Siddique Kappan bail on December 23, 2022. 

The Enforcement Directorate had filed the PMLA complaint in February 2021 against Kappan and others. In September, he had been granted bail in connection with a charge brought under the Unlawful Activities (Prevention) Act.  However, he remained in jail due to the ED case, for which he was denied bail in October by a Lucknow sessions court. He had moved to the High Court seeking bail earlier in October 2022. The bench of Justice Dinesh Kumar Singh has now granted him bail. The order has not been made available yet.

However, Kappan will still not be able to walk free immediately as the High Court order will have to be presented to the PMLA court and the vacation may stand in the way.

The order of the Allahabad High Court paves way for release from prison, 3 months after he was granted bail by Supreme Court in all other cases regist

A bench comprising Chief Justice of India U.U. Lalit and Justice S. Ravindra Bhat passed the order while allowing the appeal filed by Kappan against the PMLA court denying him bail. The verification sureties, including the one given by former vice-chancellor of Lucknow University, Roop Rekha Verma, have still to be completed by the authorities. 

What were the charges against him under PMLA?

In the PMLA case, the ED had arrested Kappan on charges that he had obtained money from a foreign country without authorization and used it to commit crimes against the interests of the country.

On October 6, 2020, Kappan and three other people were arrested while they were on their way to Hathras in Uttar Pradesh where a Dalit woman had died after allegedly being gang-raped. The police had claimed that the accused was trying to disturb the law and order in Hathras, and also alleged that the accused had links with the Popular Front of India (PFI). The journalist had initially been detained by police for violations of the Unlawful Activities (Prevention) Act (UAPA). The ED then filed a case against him in accordance with the anti-money laundering law.

The central agency had charged Kappan, Rahman, Ahmed, and Alam with receiving money from the now-banned Popular Front of India to “incite riots”. Rahman is the national treasurer of the Campus Front of India, a student body of the PFI. Ahmed is the general secretary of the Campus Front of India’s Delhi unit, while Alam is a member of the outfit as well as the PFI.

Bail in the Hathras Conspiracy Case

Siddique Kappan had been granted bail in the UAPA charges levied against him, after spending more than 2 years in jail. All the charges have now finally been cleared against him. It is important to note that three months ago, on September 9, the Supreme Court had granted bail to Kerala journalist Siddique Kappan, who has been under the custody of the Uttar Pradesh Police since October 6, 2020, on his charges filed under the UAPA.

Kappan had been kept under custody for alleged offences under Sections 17/18 of UAPA, Sections 120B 153A/295A IPC, 65/72 IT Act for alleged conspiracy to incite riots following the gangrape-murder of a Dalit minor girl in Hathras. He was granted bail by the Supreme Court bench comprising of Chief Justice of India U.U. Lalit and Justice S. Ravindra Bhat in all the above-mentioned sections. 

The order can be read here.

Related:

SC grants journalist Siddique Kappan bail in Hathras conspiracy case
Siddique Kappan’s bail plea: Supreme Court issues notice
Hathras Case: Journalist Siddique Kappan moves SC seeking bail
He had no work in Hathras: Allahabad High Court denies bail to journalist Siddique Kappan
Siddique Kappan: A journalist who has spent 500+ days in prison, for just doing his job
10 months on, Siddique Kappan still in jail!
Delhi: Journalists demand release of Siddique Kappan who completed one year behind bars
Siddique Kappan not a “responsible journalist”, incites Muslims: UP Special Task force

The post Siddique Kappan granted bail in the PMLA case by the Allahabad Court appeared first on SabrangIndia.

The Delhi High Court (HC), on September 28, ordered that exceptions on granting of bail must be made where the accused is a woman, or below the age of 16 or is ill. The observations were made by the Delhi HC after observing that the Prevention of Money Laundering Act’s (PMLA) strict bail requirements make it challenging for an accused to seek bail.

In a case allegedly involving a Rs 3,269 crore bank loan scam by Delhi-based Shakti Bhog Foods Ltd., the court issued the ruling while giving bail to an accused on medical grounds. The accused’s health was such that he could not be cared for inside of a jail, according to a Justice Jasmeet Singh panel. In September of last year, Garg and another person, Ashok Kumar Goel, were arrested in connection with the case for allegedly supplying phony business entries. Garg’s senior counsel, Siddharth Luthra, argued in court that the restrictions of “twin bail” should not apply to his client because of his major medical issues, including kidney and heart issues that cannot be successfully addressed while he is being held. Garg had previously been released on temporary bail due to health reasons, but Goel and other defendants who were later charged in the case remain in detention.

The PMLA’s twin bail condition, which the Supreme Court recently affirmed and upheld, states that an accused person cannot be released on bail unless there are reasonable grounds to believe that they are innocent and that they are not likely to commit any crimes while out on bail.

In addition to citing Section 45 and other provisions in the Act, the HC cited the PMLA’s Statement of Objects and Reasons regarding “the ill and the infirm,” which reads as follows: “In addition to the above, recommendations of the standing committee of the central government proposes to relax the conditions prescribed for grant of bail so that the court may grant bail to a person who is below 16 years of age, or a woman, or sick or infirm…”

“A bare perusal of the Statement of Objects and Reasons of PMLA shows that inclusion of the above conditions for grant of bail as a proviso to Section 45(1) of the PMLA elucidates the legislature’s intent to incorporate relaxations for persons below 16 years of age; a woman; or one who is sick or infirm,” the bench said, reported the Times of India.

The court ruled that since the PMLA does not define “sick and infirm,” it is up to the judge to determine whether an accused person qualifies for a waiver of the twin criteria based on their medical condition.

Background:

Bail Under PMLA Through Previous Judgments:

1. Nikesh Tarachand Shah Vs. Union Of India &Anr, 2017

Earlier, in this case, the Supreme Court had struck down Section 45(1) of the Prevention of Money Laundering Act, 2002 insofar as it imposed two further conditions for release on bail, for the offences punishable for a term of imprisonment of more than 3 years (under Part A of the Schedule to the PMLA). The SC held that proviso to be unconstitutional as it is violative of Article 14 and Article 21 of Constitution of India.

The 2 conditions provided under the said sub-section were as under:

• The public prosecutor must be given an opportunity to oppose any application for release on bail

• The court must be satisfied, where the public prosecutor opposes the application, that there are reasonable grounds for believing that the accused is “…not guilty of such offence, and that he is not likely to commit any offence while on bail”.

This judgment held that classification made based on the length of sentence of imprisonment had no rational basis or relation with the objects of the Prevention of Money Laundering Act 2002. The (mindless) application of Section 45(1) led to situations where the same offenders tried under different cases often ended up with different results (conclusions) depending on whether Section 45(1) has been applied or not. Thus, the twin conditions under Section 45(1) were arbitrary and discriminatory in nature. It was further observed that, in cases of anticipatory bail these twin conditions must not to be applied for granting bail leading to discrimination between those who apply for regular bail and the others who applied for anticipatory bail under Section 45(1). It was further held that in fact, the presumption of innocence, which is attached to any person being prosecuted of an offence, is inverted by the conditions specified in Section 45, whereas for grant of ordinary bail the presumption attaches.

Pursuant to this judgment, in 2018, Government of India amended the provision of bail under Prevention of Money Laundering Act which was earlier held unconstitutional. The part of the Section “punishable for a term of imprisonment of more than three years under Part A of the Schedule” was removed, and instead the phrase “under this Act” was added in the Section.

The judgment can be read here.

2. Y.S. Jagan Mohan Reddy v. C.B.I., 2013

The  Supreme Court, in this case,  observed that while granting bail to the accused, the court has to consider the following: nature of the allegations, nature of the evidence, severity of the punishment prescribed under the Act, possibility of securing the presence of the accused at the trail, beyond reasonable apprehension that accused will not tamper the concerned evidence while out on bail.

The judgment can be read here.

3. P. Chidambaram v. ED, 2019

The Hon’ble Supreme Court has laid down some guidelines that must be considered while refusing or granting bail under PMLA. As per general Indian criminal jurisprudence, bail is the rule and refusal of bail is an exception. In granting bail to the accused, the triple test is a must and is required to be followed along with the severity of the offence also has to be considered.

Triple Test

• Presence of Accused:If accused has made himself available before the agencies and court whenever required in the past and cooperated with an investigative agency. In that case, this factor can be considered for grant of bail under PMLA.

• Nature of evidence:If an investigative agency has already collected the primary document, which is material to the case, the scope of tampering the evidence is next to impossible and accused hasn’t tampered the document before.

• Deep Roots:The accused is staying at his permanent address for a long time and he/she/they are not at flight risk due strong financial position, and the accused is not previously involved in criminal activities.

However, an accused can also make an application under the provision for bail under PMLA to High Courts only when in custody. The ED and other similar agencies are exempted from following the provisions of the Code of Criminal Procedure Code, 1973 (CrPC) in their functioning.

The judgment can be read here.

A comparison of section 19 PMLA and section 41(1) CrPC shows as under:

Significantly, these twin bail conditions were struck down by the Supreme Court earlier in 2017 where a bench of Justices Rohinton Nariman and Sanjay Kishan Kaul said the ‘twintest’ was unconstitutional and arbitrary. “We must not forget that Section 45of the PMLA Actis a drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence.”The ruling was then negated by an amendment in 2018 which brought back the ‘twin bail’ conditions. Now that has been sanctified by the Supreme Court. It has said the presumption of ‘innocence’ is not a constitutional right, and that “presumption can be interdicted by a law made by Parliament / Legislature.”

4. The Supreme Court in Vijay Madanlal Choudhary vs Union of India, 2022

A bench lead by Justice AM Khanwilkar upheld several provisions of the PMLA. These provisions included the “twin-bail condition” under Section 45 of the Act, which was incidentally struck down by the apex court itself in 2017.

The following provisions of the PMLA were challenged before the Court: 

• Sections 5 and 8(4) which grants the ED wide discretionary powers to attach the property of the accused—challenged as arbitrary for violating safeguards meant to protect the accused.

• Section 17 which grants the ED wide powers to enter and search suspected property without judicial permission. Along with Section 19 which grants the power of arrest to the ED, and Section 24 which presumes guilt of the accused until it is disproved, these provisions were challenged for exempting the ED from following the rules of criminal procedure.

• Section 45 of the Act which takes away the presumption of innocence usually afforded to accused persons under criminal law. To be granted bail, the accused must prove prima facie that they were not guilty, and satisfy the Court that they will not commit any further offence. These ‘twin bail conditions’ under PMLA are central to this case.

• Section 50 allows the ED to compel accused to make self-incriminating statements under threat of a fine, was challenged for violating the fundamental rights of the accused under Article 20 of the Constitution. The petitioners contended that the investigation agencies effectively exercise police powers and should be obligated to follow the CrPC while conducting investigations. Crucially, since the ED is not a police agency, statements made by the accused to ED members in the course of an investigation can be used against the accused in judicial proceedings.

In their judgment, the Supreme Court wrote:

“Article 39 of the Constitution mandates the State to prevent concentration of wealth, thus, to realise its socialist goal, it becomes imperative for the State to make such laws, which not only ensure that the unaccounted money is infused back in the economic system of the country, but also prevent any activity which damages the economic fabric of the nation.”

The Supreme Court upheld the twin conditions for bail under amended Section 45 of the Prevention of Money Laundering Act, 2002 and said money laundering is a heinous crime, which not only affects the social and economic fabric of the nation, but promotes other heinous crimes. The bench said the twin conditions, though restrict the right of the accused to grant of bail, don’t impose absolute restraint.The top court said the provision, as applicable post the amendment in 2018, is reasonable and does not suffer from the vice of arbitrariness or unreasonableness.

“We hold that the provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act to combat the menace of money-laundering having transnational consequences including impacting the financial systems and sovereignty and integrity of the countries,” it said.

The twin conditions state that when an accused in a money laundering case applies for bail, the court has to first give an opportunity to the public prosecutor to be heard and only when it is satisfied that the accused is not guilty and unlikely to commit a similar offence when released can bail be granted.Noting that offence of money laundering has been regarded as an aggravated form of crime the “world over”, the top court said it is a separate class of offence requiring effective and stringent measures to combat.

“Money-laundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation, but also tends to promote other heinous offences, such as terrorism, offences related to NDPS Act, etc.It is a proven fact that international criminal network that support homegrown extremist groups relies on transfer of unaccounted money across nation states, thus, by any stretch of imagination, it cannot be said that there is no compelling state interest in providing stringent conditions of bail for the offence of money-laundering,” the bench had further said.

The court said it was because of the seriousness of the crime that stringent measures, including attachment and confiscation of proceeds of crime and to prosecute the people involved, have been provided for in the law.“In view of the gravity of the fallout of money laundering activities having transnational impact, a special procedural law for prevention and regulation, including to prosecute the person involved, has been enacted, grouping the offenders involved in the process or activity connected with the proceeds of crime as a separate class from ordinary criminals,” the bench had observed.

The judgment can be read here.

Why is getting bail so difficult under the PMLA?

According to the 2022SC judgment, the court also upheld the constitutionality of several other provisions of the PMLA and permitted the ED to possess a wide net of powers (which had all faced important challenges) including that:

• Enforcement Case Information Report (ECIR) cannot be equated with an FIR, and ED officers are not mandated under law to register an ECIR before initiating investigation or at any other stage of the case

• Supplying of Enforcement Case Information Report (ECIR) is not mandatory and disclosure of reasons during arrest is enough

• Authorities under the PMLA (ED officers) are not the same as police officers and the evidentiary value granted to statements of witnesses and accused persons recorded by the ED (Section 50) is not ultra vires Article 20 of the Constitution (that provides the right against self incrimination)

• The powers of arrest granted to the ED under Section 19, PMLA are in sync with purpose of the statute

• Mere possession of proceeds of crime (without any integration, layering etc.) are sufficient to allege money laundering

What happens when the State violates civil liberties, threatens the principles of natural justice, and acts in violation of the fundamental rights guaranteed to a citizen by the country’s Constitution, even in an effort to prevent the concentration of wealth, is the question that follows from the aforementioned judgment.

The ED will now find it simpler to object to anticipatory bail applications as the applicants would find it challenging to demonstrate their threat of arrest as a result of being allowed the privilege to not register an ECIR or any other comparable document at all. In addition, keeping those who have been arrested in jail would be easier if there was no record of the accusations made against them, aside from the reasons for the arrest. It’s also significant to note that the distinction between an inquiry and an investigation is already obliterated in the lack of a properly registered ECIR, and that the absence of one hinders the accused from using the remedy for quashing of proceedings, as provided for in 482 CRPC. This simply makes bail seem more distant.

Additionally, the case is already biased in favor of the prosecution because any statement made by the accused during the inquiry and investigation stage, even before the person is formally branded an accused, is admissible during the legal processes.The “twin criteria” that apply in a PMLA case will make it difficult to get bail in any instance.

The burden of proof still lies with the accused in PMLA cases, which strikes at the very core of the “presumption of innocence” — a general legal principle upheld by courts across the nation and derived from Articles 20 and 21 of the Constitution of India. This is quite astounding in light of the petitioners’ in-depth arguments about how dangerous this was. The PMLA has severely restricted the right to personal liberty by allowing a draconian power of arrest to stand, without requiring ED to even record an ECIR, and then placing tight restrictions on bail.

For women, those under the age of 16, and the sick or infirm, the Delhi High Court’s decision may be a relief, but there is still a long way to go. Instead than leaving it up to the judge’s discretion to decide whether or not the accused should be given bail, the first step should be to define the terms sick and infirm.

Related:

ED a ‘vengeful complainant’: Mumbai PMLA court
‘Essence of Tyranny is Harsh Laws Used Selectively Against Opponents’—Sanjay Hegde
Enforcement Directorate raids activist Harsh Mander’s home, orphanage, offices

The post Women, Sick & Infirm may get bail under PMLA: Delhi HC appeared first on SabrangIndia.