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

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 - Not arrested during investigation;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...

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

Sohini Chowdhury

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