Case BriefsSupreme Court

Supreme Court: The bench of RF Nariman and SK Kaul, JJ declared Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act is involved, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India.

The Conditions that the Court held to be unconstitutional are:

  • 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.

Calling Section 45 of PMLA Act a drastic provision, the Bench said the provision

“turns on its head the presumption of innocence which is fundamental to a person accused of any offence. Before application of a section which makes drastic inroads into the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India, we must be doubly sure that such provision furthers a compelling State interest for tackling serious crime. Absent any such compelling State interest, the indiscriminate application of the provisions of Section 45 will certainly violate Article 21 of the Constitution.

Senior Advocate Mukul Rohatgi, appearing for the petitioners, argued before the Court that Clauses 43 and 44 of the 1999 Bill, which correspond to Sections 44 and 45 of the present Act, were very differently worded and dealt only with offences under the 2002 Act. He said that the twin conditions laid down as additional conditions for grant of bail were, at this stage, only qua offences under the 2002 Act. However, when Parliament enacted the 2002 Act, this scheme was completely changed in that Section 45 of the Act now spoke only of the predicate/scheduled offence and not the offence under the 2002 Act.

Attorney General AK Venugopal, on the other hand, argued that the twin conditions contained in Section 45 are only in furtherance of the object of unearthing black money and that the Court should, therefore, be very slow to set at liberty persons who are alleged offenders of the cancer of money laundering.

Taking note of the Para 18 of State of Uttar Pradesh v. Amarmani Tripathi, (2005) 8 SCC 21, that laid down the conditions for grant of bail, the Court held that it is obvious that the twin conditions set down in Section 45 are a much higher threshold bar than any of the conditions laid down in para 18 of the said judgment. 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 of innocence attaches, after which the various factors set out in paragraph 18 of the judgment are to be looked at.

The Court further noted:

“a classification based on sentence of imprisonment of more than three years of an offence contained in Part A of the Schedule, which is a predicate offence, would have no rational relation to the object of attaching and bringing back into the economy large amounts by way of proceeds of crime. When it comes to Section 45, it is clear that a classification based on sentencing qua a scheduled offence would have no rational relation with the grant of bail for the offence of money laundering and hence, the twin conditions need to be annulled on the basis of the equal protection clause.”

The Court, hence, directed that all the matters that were placed before it, in which bail has been denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail and considering that persons are languishing in jail and that personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision. [Nikesh Tarachand Shah v. Union of India,  2017 SCC OnLine SC 1355, decided on 23.11.2017]