If ED Chooses To Oppose Bail, Then It Must Show Foundational Facts Of Money Laundering Are Prima Facie Established : Supreme Court

The Supreme Court today (on August 28), observed that in money laundering cases, where the prosecution is opposing the bail application, the counter affidavit of the Investigating Agency (Enforcement Directorate) should prima facie establish three foundational facts (as set out in Vijay Madanlal Choudhary). To elaborate, the Court in Vijay Madanlal Choudhary had held that the prosecution should succeed in establishing three foundational principles to cement the legal presumption that proceeds of crime are involved in money laundering. These three foundational facts are namely: a. Commission of criminal activity relating to a scheduled offence; b. property in question has been derived or obtained, directly or indirectly, as a result of that criminal activity; c. the concerned person is, directly or indirectly, involved in any process or activity. This was held in the context of Section 24 of the Prevention of Money Laundering Act (PMLA). For convenience, the same reads as: “(a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering.” Adverting to the present case, the Bench of Justices BR Gavai and KV Viswanathan said that in order to establish these three basic foundational facts, the counter/response to the bail application becomes very significant. “In cases where the Public Prosecutor takes a considered decision to oppose the bail application, the counter affidavit of the Investigating Agency should make out a cogent case as to how the three foundational facts set out hereinabove are prima facie established in the given case to help the Court at the bail application stage to arrive at a conclusion within the framework laid down in Vijay Madanlal Choudhary (supra).” The Court added that it was only after establishing the same that the presumption under Section 24 would arise and the burden would shift on the accused (to rebut the same). Besides, the counter affidavit should “specifically crystallize” the relied material for establishing the foundational facts. “It is after the foundational facts are set out that the accused will assume the burden to convince the court within the parameters of the enquiry at the Section 45 stage that for the reasons adduced by him there are reasonable grounds to believing that he is not guilty of such offence.,” the Court said."In view of the importance of the three basic foundational facts that the prosecution needs to establish, the counter/response to the bail application in the original Court is very significant in PMLA bail matters. In cases where the Public Prosecutor takes a considered decision to oppose the bail application, the counter affidavit of the Investigating Agency should make out a cogent case as to how the three foundational facts set out hereinabove are prima facie established in the given case to help the Court at the bail application stage to arrive at a conclusion within the framework laid down in Vijay Madanlal Choudhary (supra). It is only thereafter the presumption under Section 24 would arise and the burden would shift on the accused. The counter to the bail application should specifically crystallize albeit briefly the material sought to be relied upon to establish prima facie the three foundational facts. It is after the foundational facts are set out that the accused will assume the burden to convince the court within the parameters of the enquiry at the Section 45 stage that for the reasons adduced by him there are reasonable grounds to believing that he is not guilty of such offence." The bench held thus while granting bail to an accused named Prem Prakash in a money laundering case. In a judgment authored by Justice KV Viswanathan, the Supreme Court held that even in the Prevention of Money Laundering Act (PMLA), bail is the rule and jail is the exception. The Bench added that this principle is only a paraphrasing of Article 21 of the Constitution of India, as per which no person shall be deprived of his life or personal liberty except according to the procedure established by law. “Liberty of the individual is always a Rule and deprivation is the exception. Deprivation can only be by the procedure established by law, which has to be a valid and reasonable procedure. Section 45 of PMLA by imposing twin conditions does not re-write this principle to mean that deprivation is the norm and liberty is the exception.” Reliance was placed on the recent judgments including Manish Sisodia, Ramkripal Meena and Javed Gulam Nabi where prolonged incarceration and delay in trial were cited as reasons to relax the rigours of Section 45 of PMLA. “It is in this background that Section 45 of PMLA needs to be understood and applied. Article 21 being a higher constitutional right, statutory provisions should align...

If ED Chooses To Oppose Bail, Then It Must Show Foundational Facts Of Money Laundering Are Prima Facie Established : Supreme Court

Gyanvi Khanna

The presumption under S.24 of the PMLA will arise only if the foundational facts are established, the Court said.

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