PMLA Judgment : A Critique Of Upholding Of Twin Conditions For Bail

The Supreme Court, in Vijay Madanlal Choudhary vs Union of India 2022 LiveLaw (SC) 633, has upheld the Constitutional validity of "twin conditions" for bail under amended Section 45(1) of the Prevention of Money Laundering Act, 2002 Act.

These twin conditions are that the Court should be satisfied that (i) there are reasonable grounds for believing that the accused is not guilty of such offence; and (ii) he is not likely to commit any offence while on bail. To hold that they are not unconstitutional, the Apex Court bench essentially noted:

(a) There are several other legislations where such twin conditions have been provided for.

(b) the Judgment of the Constitution Bench of the Supreme Court in Kartar Singh vs State Of Punjab (1994) 3 SCC 569 in which such twin conditions in TADA were upheld.

Further, it disagreed with the observations made in Nikesh Tarachand Shah vs. Union of India (2018) 11 SCC 1 which held that Kartar Singh decisions observations qua 'heinous nature' were not applicable to PMLA offences. Finding that Money-laundering is one of the heinous crimes,  it held Section 45(1) must stand the test of fairness, reasonableness and having nexus with the purposes and objects.

'Several other legislations'

There are several legislations which has similar 'twin conditions'. For eg: Terrorist and Disruptive Activities (Prevention) Act, 1987, the Maharashtra Control of Organised Crime Act, 1999, the Narcotic Drugs and Psychotropic Substances Act, 1985. 

TADA Twin Conditions upheld in Kartar Singh

Section 20(8) of TADA  contains these twin conditions. In Kartar Singh, the Constitution Bench of the Supreme Court upheld these twin conditions essentially observing that they are in consonance with the conditions prescribed under clauses (i) and (ii) of sub-section (1) of Section 437 and clause (b) of sub-section (3) of that section. To quote from the judgment, 'the condition that "there are grounds for believing that he is not guilty of an offence", which condition in different form is incorporated in other Acts such as clause (i) of Section 437(1) of the Code and Section 35(1) of FERA and 104(1) of the Customs Act, cannot be said to be an unreasonable condition infringing the principle of Article 21 of the Constitution."

Nikesh Tarachand Shah distinguished Kartar Singh

In Nikesh Tarachand Shah, the court had observed that such a condition in TADA was upheld in Kartar Singh only because the offence under TADA was a most heinous offence in which the vice of terrorism is sought to be tackled. "Given the heinous nature of the offence which is punishable by death or life imprisonment, and given the fact that the Special Court in that case was a Magistrate and not a Sessions Court, unlike the present case, Section 20(8) of TADA was upheld as being in consonance with conditions prescribed under Section 437 of the Code of Criminal Procedure.In the present case, it is Section 439 and not Section 437 of the Code of Criminal Procedure that applies.", it was observed.

Heinous PMLA Offences

In the present case, the bench disagreed with these observations with "utmost humility at their command". This is based on the following findings:

(1) Even the TADA Act, the appointment of Designated Court is from amongst the Sessions Judge or Additional Sessions Judge in any State and the offences under that Act were made exclusively triable before such Designated Court and not the Magistrate. The powers of the Magistrate were required to be bestowed on the Designated Court being the Sessions Judge for the limited purpose of proceeding with the case directly before it.

(2) 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.

(3) Further, the quantum of punishment for money-laundering offence, being only seven years, cannot be the basis to undermine the seriousness and gravity of this offence. The quantum of sentence is a matter of legislative policy. The punishment provided for the offence is certainly one of the principles in deciding the gravity of the offence, however, it cannot be said that it is the sole factor in deciding the severity of offence.

The judgment also refers to two other decisions in Ranjitsing Brahmajeetsing Sharma vs. State of Maharashtra and Anr. (2005) 5 SCC 294 and Serious Fraud Investigation Office vs. Nittin Johari (2019) 9 SCC 165, wherein the similar twin conditions in MCOCA and Companies Act were upheld.

Piggybacking on Kartar Singh

Therefore basically, in the present case, the twin conditions in PMLA have been upheld relying on Kartar Singh and subsequent judgments by clubbing terrorism and money laundering under 'heinous offences'. This is a classic case of piggybacking, since there is no independent analysis regarding the stringent nature of twin conditions. But given the fact that it is a three judges bench, it is quite natural that it would be bound by what the Constitution bench held in Kartar Singh.

When a High Court raised concerns about twin conditions

Reviewing Kartar Singh : 'Appear' vs 'Satisfied'

As stated earlier, in Kartar Singh, the bench was impressed with the Government's argument that the condition that "there are grounds for believing that he is not guilty of an offence", is only a condition in different form is incorporated in other Acts such as clause (i) of Section 437(1) CrPC, Section 35(1) of FERA and 104(1) of the Customs Act, and thus cannot be said to be an unreasonable condition infringing the principle of Article 21 of the Constitution.

Section 437(1) reads as follows: When any person accused of, or suspected of, the commission of any non-bailable offence is arrested or detained without warrant by an officer in charge of a police station or appears or is brought before a Court other than the High Court or Court of session, he may be released on bail, but— (i) such person shall not be so released if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life.

The key word in Section 437(1) are "appear".

Now the Section 20(8)  of TADA reads as follows: (8) Notwithstanding anything contained in the Code, no person accused of an offence punishable under this Act or any rule made thereunder shall, if in custody, be released on bail or on his own bond unless, – 1. the Public Prosecutor has been given an opportunity to oppose the application for such release, and 2. 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.

The dictionary meaning of the word 'appear is 'seem; give the impression of being'. When one is 'satisfied' about a particular thing, it means he is mostly convinced about that. The Court, from the materials on record, can be given an impression that one is not guilty of an offence, but it is virtually impossible to satisfy it. Therefore, unlike Section 437 CrPC, Section 20(8) TADA requires the Court to be satisfied 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. In my humble view, this 'satisfaction' requirement in Section 20(8) TADA by itself makes it quite distinct and stringent from "appear" requirement in Section 437(1) CrPC.

The court in Kartar Singh also compares Section 437(3)(b) with second condition [regarding satisfaction that accused is not likely to commit any offence while on bail]. Under Section 437(3), the Court can impose conditions that such person shall not commit an offence similar to the offence of which he is accused, or suspected, of the commission of which he is suspected. But the twin condition is not about imposing condition, but rather a satisfaction of the Court that the accused is not likely to commit any offence while on bail. 

That is why, in Nikesh Tarachand Shah, the court observed that the twin conditions in Section 45 PMLA 'is a drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence.' There is hardly any judgment which said that the requirement under 437(1) are stringent like this. Further, when viewed thus, the Court in Nikesh Tarachand Shah was justified in distinguishing Kartar Singh by observing that Section 20(8) TADA twin conditions were upheld only because it dealt with a most heinous offence in which the vice of terrorism is sought to be tackled.

In the present case, the bench observed that the punishment provided for the offence is certainly one of the principles in deciding the gravity of the offence, however, it cannot be said that it is the sole factor in deciding the severity of offence. True, the Supreme Court and the Parliament has termed 'rape' as a heinous offence. But a rape accused cannot be sentenced to death while a murder accused can be. Both rape accused and murder accused can get bail under Section 439 CrPC, but a PMLA accused or an NDPS accused has to satisfy the 'twin conditions'.  

Be that as it may, the three judges bench in the present case, being a larger bench than the one which decided Nikesh Tarachand Shah, is entitled to overrule the latter. But it only disagreed with it, without explicitly overruling it. 

Note: Author is an Advocate practising in High Court of Kerala. Views expressed are personal.