S.45 PMLA: Twin Conditions For Bail Declared Unconstitutional By SC Stand Revived By 2018 Amendment Act: Jharkhand High Court

The Jharkhand High Court recently observed that twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002 that were declared unconstitutional by the Supreme Court in the case of Nikesh Tarachand Shah v. Union of India, stand revived on account of the defects purportedly being cured by the Parliament by way of 2018 Amendment Act.

On the basis of the above, Justice Subhash Chand denied a bail application of an accused under the Act.

The case relating to recovery of cash to the tune of Rs.1,49,33,610/- on account of extortion and destructive activity and other incriminating materials from Maoist cadre, who were actively involved in destructive activities against the State, was handed over to the National Investigation Agency.

Accordingly, a case was registered under Sections 414/384/386/387/120B of the I.P.C., Section 25(1-B) a, 26,35 of the Arms Act, and 17 (1) (2) of the Criminal Law Amendment Act and 16,17,20 & 23 of the Unlawful Activities (Prevention) Act, 1967. The N.I.A. has submitted a supplementary charge sheet against the accused and a second supplementary charge sheet vide 32A/2018.

Since the offence under Section 120-B read with 386 & 387 of Indian Penal Code, Section 25 & 26 of Arms Act, 1959 are specified in part A of the schedule to PMLA, and the money recovered was a tainted property, the Directorate of Enforcement also commenced a simultaneous investigation after registering the complaint case.

The bail applicants argued that since the amended provisions of Section 45 of the said Act are under challenge before the Apex Court, therefore, the same would not apply in the present case.

The ED on the other hand argued that constitutional presumption in favour of legislative enactment will be raised and since the Amendment Act has not been stayed by the Supreme Court, therefore, the same will be applicable while considering the bail applications under PMLA.

The Court noted that the defects in the provisions were cured by Parliament by way of Amendment Act of 2018 and consequently, the twin conditions of Section 45 while disposing of the bail application under the Act, 2002 stood revived.

"Where there is a competent legislative provision which retrospectively removes the substratum of foundation of a judgment, the said exercise is a valid legislative exercise provided it does not transgress any other constitutional limitation."

The twin conditions for bail were: (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail.

The Supreme Court had had struck off Section 45 since it linked the twin conditions to the predicate offences, which were not money laundering offences.

In the amended provision, the words "imprisonment for a terms of imprisonment of more than three years under Part A of the schedule" has been substituted with "accused of an offence under this Act……"

In this backdrop, the High Court observed,

"This Court is of the considered view that the provisions of Section 45 of the Act, 2002 prior to judgment of Hon'ble Apex Court in the case of Nikesh Tarachand Shah (supra) had been declared unconstitutional; but the defects in provisions of the said Act was cured by Parliament by way of Amendment Act 13 of 2018 and consequently, the twin conditions of Section 45 while disposing of the bail application under the Act, 2002 stood revived."

It referred to the case of Assistant Director Enforcement Directorate vs. Dr. V.C. Mohan where it was held that once the prayer for bail is made for the offence under PMLA 2002, the rigors & principles underlying Section 45 get triggered.

Accordingly, the Court refused the bail application, stating that there are reasonable ground for believing that the applicant is guilty of the offences of money laundering and he is likely to commit any offence if enlarged on bail.

Also Read: Also Read: S.45 PMLA: Twin Conditions For Bail That Were Declared Unconstitutional By SC Stand Revived By 2018 Amendment Act: Bombay High Court

Also Read: PMLA: Supreme Court Rejects Challenge Against Madras H.C. Decision That 2018 Amendment Revived Twin Conditions For Bail Under Section 45

Case Title: Bindreshwar Ganju v. Union of India

Citation: 2022 LiveLaw (Jha) 42

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