Shifting Paradigms: Understanding The Supreme Court's Evolving Stance On Bail Under The PMLA

In the case of Manish Sisodia, the Supreme Court's decision to grant bail under PMLA underscores a crucial legal principle: the right to bail should be recognised, especially in cases of prolonged incarceration. The court acknowledged Sisodia's right to a speedy trial, noting his 17-month-long incarceration and the ongoing delay in the commencement of the trial. The bench of Justices B.R. Gavai and K.V. Viswanathan emphasized that "bail is the rule and jail the exception" even in PMLA cases. The court held that Sisodia had been "deprived of his right to speedy trial" due to the long period of incarceration and the trial not having commenced. The Supreme Court reiterated that the right to speedy trial is a "facet of the right to life," and that prolonged "detention or jail before being pronounced guilty of an offence should not become punishment without trial"..

This approach is consistent with established principles of bail jurisprudence, as reflected in the words of Justice Krishna Iyer in Gudikanti Narasimhulu v. State, [(1978) 1 SCC 240], that “the issue of bail is one of liberty, justice, public safety and burden of the public treasury, all of which insist that a developed jurisprudence of bail is integral to a socially sensitised judicial process.” The Supreme Court reaffirmed this principle once again in Satender Kumar Antil v. Central Bureau of Investigation [2022 LiveLaw (SC) 577], by reiterating, "that the principle to be deduced from the various sections in the Criminal Procedure Code was that grant of bail is the rule and refusal is the exception. An accused person who enjoys freedom is in a much better position to look after his case and to properly defend himself than if he were in custody. As a presumably innocent person he is therefore entitled to freedom and every opportunity to look after his own case. A presumably innocent person must have his freedom to enable him to establish his innocence." Although these bail jurisprudence principles were already established, the courts overlooked them while denying bail under the PMLA.

Recently, there has been a shift in the trend of denying bail under the PMLA, highlighted by the Supreme Court's more lenient approach in granting bail to individuals accused under the act. In P. Chidambaram v. Directorate of Enforcement [(2020) 13 SCC 791], a case under PMLA, the Supreme Court reaffirmed that the fundamental principle of bail jurisprudence that granting bail is the rule, and refusal is the exception, remains unchanged. The Court elucidated that neither the pertinent legislation nor the established principles of bail jurisprudence impose a blanket prohibition on granting bail in cases involving economic offences. This nuanced approach paved the way for liberal approach by the Supreme Court while deciding bail applications under the PMLA by balancing the gravity of the offense under PMLA with the core principles of justice and individual rights.

Earlier, the courts denied bail under PMLA while repeatedly acknowledging the formidable nature of its provisions, especially the twin conditions under Section 45 of the Act, which made securing bail exceptionally challenging. However, the prolonged incarceration of the accused and potential misuse of the power to arrest seems to have compelled the Supreme Court to rethink its stance and consider the potential violations of Article 21, particularly regarding the non-disclosure of the Enforcement Case Information Report (ECIR) to the accused, not providing grounds for arrest in writing to the accused, and arresting without “necessity to arrest”. The Supreme Court's approach in the cases of Pankaj Bansal, Manish Sisodia, K. Kavitha and Arvind Kejriwal illustrates this trend. In these cases, the Court has emphasised the need to balance the rights of the accused with the requirements of effective investigation. This stance aligns with the growing tendency to scrutinise the applicability of stringent twin conditions while granting bail under PMLA more closely and not to accept the same as something written in stone.

Although the exact causes of the paradigm shift of the Supreme Court in bail jurisprudence under PMLA are subject to deliberations, recent observations by the Supreme Court in several high-profile cases may offer some insight into the underlying reasons. Recently, while hearing a bail petition of Chhattisgarh-based businessman Sunil Kumar Agarwal, who was arrested for the offence of money laundering concerning coal transportation, the Supreme Court took note of the alarmingly low conviction rate under the PMLA by orally observing that "5000 odd cases have been registered (under PMLA) and conviction has been obtained only in 40 cases (in ten years)".

This was a reference to the information provided by Union Minister of State for Home Nityanand Rai on 6th August 2024 regarding the data since 2014. These statistics may be one of the reasons for the Supreme Court to reevaluate the efficacy and equity of extended pre-trial detention in such cases, leading to a substantial change in bail jurisprudence under PMLA. Another factor contributing to this notable shift could be the growing criticism of the potential misuse of the PMLA as a political tool, as evidenced by the Court's approach in cases involving political figures. The Supreme Court has expressed concern over the misuse of investigative powers, stressing the importance of conducting fair and transparent investigations. During the bail hearing for BRS leader K Kavitha, the Supreme Court expressed clear dissatisfaction with how the ED and lower courts have been handling bail cases under the PMLA. Concerns were raised about the “fairness” of the ED in relying on the self-incriminating statements of some accused turned approvers. The disquiet of the court was evident in Justice Gavai's observation that the “Prosecution has to be fair. A person who incriminates himself has been made a witness. Tomorrow you pick up anyone as you please? You cannot pick and choose any accused. What is this fairness?”The bench was also critical of the Delhi High Court's decision not to extend the benefit of PMLA Section 45 (1) to K Kavitha by scathingly observing that “courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45 and similar provisions in the other Acts”. These remarks are not mere offhand comments but reflect the Supreme Court's dissatisfaction with how stakeholders are approaching bail applications under the PMLA.

The Court's evolving liberal perspective on bail jurisprudence under the PMLA, despite the stringent twin conditions outlined in Section 45, extends beyond merely granting bail. It is important to note that these twin conditions, initially declared unconstitutional in Nikesh Tarachand Shah v. Union of India [2018 (11) SCC 1], were subsequently reinstated through legislative amendment. The later judgment in Vijay Madanlal Choudhary v. Union of India [2022 LiveLaw (SC) 633] upheld these amended provisions. However, the Supreme Court's decision to revisit specific aspects of this judgment, especially concerning the burden of proof imposed on the accused and the failure to disclose the ECIR, demonstrates the Supreme Court's commitment towards streamlining the legal process and the jurisprudence surrounding bail under the PMLA.

In Prem Prakash v. Union of India through the Directorate of Enforcement [SLP(Crl) No. 5416/2024], the Supreme Court even raised question about the statement made by the accused under Section 50 of the PMLA by holding that any statement made under Section 50 of the PMLA by an accused in custody is inadmissible against them, as they are not acting with a free mind as such statements violate principles of fair play and justice. The court while pronouncing the judgment reiterated that even in PMLA, bail is the rule and jail is the exception.

The Supreme Court's recent judgments and observations signal a significant paradigm shift in the approach to bail under the PMLA, which, rather than adhering to the stringent twin conditions, emphasises the importance of individual liberty, the presumption of innocence, and the need for speedy trials. The liberal approach adopted by the Supreme Court while granting bail under PMLA seems to recalibrate the balance between state power and individual rights. The changing bail laws under the PMLA are expected to significantly impact how justice is administered in India. It is crucial that, while tackling the serious crime of money laundering, these laws do not undermine fundamental rights and principles of natural justice.

Author: Akhilesh Dubey is Advocate and Solicitor practicing in Mumbai and Delhi and can be reached by email on mail@akhileshdubey.com for comments.