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Twin Conditions For Bail Under Section 45 PMLA Have Been Struck Down : Supreme Court Clarifies Guidelines On Grant Of Bail

Sohini Chowdhury
16 Dec 2021 2:40 PM GMT
Twin Conditions For Bail Under Section 45 PMLA Have Been Struck Down : Supreme Court Clarifies Guidelines On Grant Of Bail
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On Thursday, while hearing application seeking clarification to its order dated 07.10.2021, issuing guidelines on the aspect of the grant of bail to accused who are not arrested during the investigation on charge sheet being filed, the Supreme Court clarified that the twin conditions for grant of bail specified in Section 45 of Prevention of Money Laundering Act (PMLA) have been...

On Thursday, while hearing application seeking clarification to its order dated 07.10.2021, issuing guidelines on the aspect of the grant of bail to accused who are not arrested during the investigation on charge sheet being filed, the Supreme Court clarified that the twin conditions for grant of bail specified in Section 45 of Prevention of Money Laundering Act (PMLA) have been struck down.

"We are putting a caution that merely by categorising certain offences as economic offences which may be non-cognizable it does not mean a different meaning is to be given to our order….Our intention was to ease the process of bail…",the Court observed in the order.

On 7th October, 2021, a Bench comprising Justices Sanjay Kishan Kaul and MM Sundresh had passed detailed guidelines regarding grant of bail to accused on the filing of the chargesheet, who were otherwise not arrested during the course of the investigation. As agreeable to Additional Solicitor General, Mr. S.V. Raju and Senior Advocate, Mr. Sidharth Luthra, two requisite conditions for the application of the guidelines were set out by the Bench -

  1. Not arrested during investigation;
  2. Cooperated throughout in the investigation including appearing before the Investigating Officer whenever called.

Thereafter, the offences were categorised into 4 Groups - A, B, C and D. Category C Offences, therein read as under -

"In case of Category (C) offences [Offences punishable under Special Acts containing stringent provisions for bail like NDPS (S.37), PMLA (S.45), UAPA (S.43D(5), Companies Act, 212(6), etc.], the same guidelines as Category B & D are applicable with the additional condition of compliance of the provisions of Bail under NDPS S. 37, 45 PMLA, 212(6) Companies Act 43 d(5) of UAPA, POSCO etc."

On Thursday, the Bench heard an application seeking clarification, particularly with respect to the additional condition compliance under Section 45 of the PMLA Act, which was struck down by the Supreme Court in Nikesh Tarachand Shah v. Union of India And Anr. (2018) 11 SCC 1. One of the concerns raised during the hearing was that as the order of the Bench dated 07.10.2021 particularly mentions '45 PMLA', the Magistrates' Court while hearing bail matters interprets it in a manner so as to restore the conditions of Section 45. Asking all the Counsels assisting the Court to sit down and make a note of all the clarifications that needs to be sought, the Bench repeatedly stressed on its intention to pass the order of 07.10.2021 i.e. to ease the process of bail.

The Counsels, who sought clarification, argued that due to the rampant misinterpretation of the Court's order, certain anomalies have cropped up, which requires urgent clarification.

"There are some inconsistencies between the categories. For eg: Category D is Economic offences other than special statute. Theft punishable with 3 years is an economic offence. It would come under category A or category B..There are some anomalies."

With respect to PMLA, it was submitted -

"Section 45 of the PMLA has been struck down."

Mr. Raju averred that though Section 45 was struck down by the Court, it has been amended.

It was submitted that the said amendment was under challenge.

Intending to clarify the order in respect of the struck-down provision of PMLA, the Bench stated -

"What we can do is, we can clarify this aspect today."

Mr. Raju apprised the Bench that the challenge to Section 45 was pending before Court No. 3 of the Supreme Court.

The Bench further clarified that the decision pertaining to the amendment would be taken up by the concerned Bench, however it intends to modify the order of 07.10.2021 to the extent so as to indicate that Section 45 of PMLA has been struck down.

"That will be decided…We just want to mention that Section 45 of PMLA has been mentioned though the provision has been struck down."

Mr. Raju interjected, "The amended provision has not been struck down."

The Bench stated, "The original provision has been struck down…My concern is that it should not be taken as some kind of imprimatur by the Court."

The Bench dictated the order -

"The parties state that they will…work out some fine tuning required to give meaning to the intent of our order dated 7.10.2021. At this stage it suffices to say that by referring to Category C Section 45 of PMLA has been mentioned, which has been struck down by this Court. Ld ASG states that an amendment was made which is pending challenge...and is a matter to be considered by that Bench. We are putting a caution that merely by categorising certain offences as economic offences which may be non-cognizable it does not mean a different meaning is to be given to our order….Our intention was to ease the process of bail…"

The Bench, elucidating on its intention to encourage grant of bail, asked the parties involved in the matter to collectively decide and enumerate the clarification they seek from the Court.

"That is why the idea is to encourage bail not to discourage bail…All of you are here..I suggest you sit down and work it out. What is needed to be done is that collectively work out what clarification…give me a half page note on it. Request ASG to also prevent unnecessary matters coming to this court…"

Lamenting, that the stringency displayed by the lower courts in granting bail, has converted the Supreme Court into a bail court, the Bench opined -

"We have been converted into a bail court…Nearing 40% cases we are called upon to grant anticipatory bail…The cases which were supposed to be finished off at the TC level or at least HC level, it seems somewhere the signal has gone wrong. Some rectification is required…"

Expressing concern that jail is becoming the norm, with the investigation in abeyance, the Bench remarked -

"In economic offences, the idea is to recover the amount..the investigation does not go on and on and you may need custodial interrogation in some cases looking at the largeness of the effects. It cannot be that everyone has to be kept behind bars…See heinous crimes are others are different in nature, but economic offences are also crimes against society but it should not go to a stage where you put everybody behind bars, and investigation does not complete…"

Commenting on the sorry state of affairs, the Bench pointed out that even when an accused cooperates in the investigation, deposits the disputed amount, their anticipatory bails are rejected.

"Today the anticipatory bail against arrest was he cooperated with investigation, deposited the disputed amount, after that anticipatory bail is rejected."

Senior Advocate, Mr. Siddharth Agarwal pointed out that the order dated 07.10.2021 specifically stated that it does not create any additional fetters on grant of bail -

"...Your lordships' order said that this is not for creating fetters."

Disturbed by the approach taken by the lower courts, the Bench reckoned -

"I am troubled by the fact that the intent is put on a reverse. I think we went into too much detail."

Clarifying the same in the order, the Bench dictated -

"We will say that the order no way imposes additional fetters but is in furtherance of the line of judicial thinking to enlarge the scope of bail."

Senior Advocate, Mr. N. Hariharan specified the difficulty with respect to Section 45 of PMLA.

He added that Section 19 of PMLA, granting power to arrest, does not contemplate such arrest and in view of the same, the conditions under Section 45 would not at all come into play.

"In relation to 45 we are facing a peculiar circumstance. Now because of the mention of the section there the anomalous situation is that even when the prosecution does not arrest and the person is produced before court, an anomalous situation is being created because no arrest is contemplated in Section 19 of PMLA. If 19 does not come into play then 45 will not come into play otherwise."

Again, the Bench clarified, "We have already laid down that if the Investigating Agency does not need to arrest during the investigation, then we have discouraged."

Mr. Hariharan further submitted -

"What they are interpreting is that Section 45 stands restored by this judgment."

The Bench stated, "We have already observed that it was struck down."

However, Mr. Hariharan insisted that clarification should be provided with respect to Section 45.

"In the meanwhile can they assume that by the guidelines Section 45 stands restored? We need a clarification on this..as far as 45 is concerned , even if the Investigating agency does not choose to arrest in PMLA, and produce the person along with the complaint, he should be entitled to the benefit which is available w.r.t. other cases."

Disagreeing with his suggestion, Mr. Raju informed the Court that such guidelines cannot be issued in view of the fact that there might be cases where the Investigating officer is corrupt and the accused is allowed to benefit from the same.

"For that I have something to say,...if the IO is corrupt and chooses not to arrest, there cannot be such guidelines…Ultimately we will sack the IO, that is different."

Further clarifying the order, the Bench dictated -

"If during the course of investigation, there is no cause to arrest the accused, merely because chargesheet is filed, would not be an ipso facto cause to arrest…"

It enquired, "Why are the Magistrates interpreting it in different fashions?"

The Counsels assisting the Court suggested that "This is the interpretation given by the Department there."

The Bench opined that the mindset of the lower courts prevents it from granting bail and unfortunately, an order passed by the Supreme Court cannot change such mindset.

"The mindset is that let us find some way of non granting bail. Mindset cannot be changed by an order."

Senior Advocate, Mr. Amit Desai, apprised the Court that in Bombay the same problem is witnessed.The Trial Court interprets the guideline as a judgment, ignoring the law laid down by the court on the issue of grant of bail over the last few decades.

"A small thing, in Bombay in Trial Courts we have same problem…the PPs are misinterpreting the laws…They misinterpret and interpret the guideline as a judgment and therefore all the law… laid down.. is now to be considered as not relevant because please see the guideline…"

It was pointed out by Senior Advocate, Mukul Rohatgi that when a person who meets the requisites set out in the order of 07.10.2021, appears on summons, they have the recourse of Section 88 of Cr.P.C, whereby they ought to apply for bond and not bail. The Category A of the order is read in such a manner so as to indicate that Section 88 resource is not available to the accused and on appearance they are taken into custody. He requested the Court to specify in the order that the recourse to Section 88 was available with the accused.

"At page 10 of the order …referred to the requisite condition of a person who has cooperated and not been arrested during investigation. If a person is not arrested during investigation…when he appears on summons…resources are in Section 88 of the Code…you get a bond. Now what is happening is that…when a man appears in such a situation, the court takes him into custody, which is contrary to 88. In Category A, indicated that the bail of those who have cooperated without being taken into custody…now this gives an impression that recourse of 88 is not available…This would give an impression that a man who appears during summon, who has not been arrested is again subjected to discretion, as opposed to bond of 88. Either your lordships amend and say recourse to 88 is available."

Mr. Desai added, "Even in complaint cases, people have to apply for bail."

Indicating that a change in the approach of the prosecution and the Court is urgently required, the Bench remarked on the manner in which bail applications are dealt with in this day and age -

"A change is required from courts and prosecution…Bail hearing goes on for hours…I don't feel a bail matter can go on for more than 15-20 min…The whole issue is the prosecution thinks whether we can convict or not let us keep behind the bars. And the accused thinks this is the final hearing, whether we get acquittal or not. The whole time that we should devote to prosecution of a case is going to bail matters."

Another issue pointed out by Mr. Desai was that the non-grant of bail also has an adverse effect on overcrowding in jails -

"One additional factor…overcrowding in jail…and all the undertrials are sitting in jail.."

However, in a lighter vein, Mr. Raju apprised all present, that the economic offenders are not overcrowding jails, but hospitals.

"It is overcrowding of hospitals. All economic offenders are in hospitals. 90% of them…difficult to digest."

The Bench will hear the matter next on 20th January 2022.

Background

In Siddharth v. State of U.P., the Court taking notice of directions laid down by the Delhi High Court in Court on its own Motion v. CBI (2004) 72 DRJ 629 held that Section 170 of the Cr.P.C. does not impose an obligation on the officer-in-charge to arrest accused at the time of filing the charge sheet. It further clarified that the Magistrate while accepting the chargesheet is to only issue summons and not arrest warrant. These directions were reiterated in Aman Preet Singh v. CBI. The Bench held -

"If a person has been enlarged and free for many years and has not even been arrested during investigation, to suddenly direct his arrest and to be incarcerated merely because charge sheet has been filed would be contrary to the governing principles for grant of bail."

On the last occasion, the Bench issued detailed guidelines on the grant of bail on the filing of the chargesheet for those accused, who are not arrested during the course of the investigation.

[Case Title: Satender Kumar Antil v CBI SLP (Crl) 5191/2021]

(Report to be updated after order is uploaded)

Click Here To Read/Download Order


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