Supreme Court Judgments On Bail Under Section 45 Of The Prevention Of Money Laundering Act, 2002, In The Post Vijay Madanlal Era

I. INTRODUCTION

The present Article analyzes the judgments passed by the Hon'ble Supreme Court on regular bail under Section 45 of the Prevention of Money Laundering Act, 2002 (“PMLA”), subsequent to its decision in Vijay Madanlal Choudhary v. Union of India & Ors. (“Vijay Madanlal Judgment”). While the decision in the Vijay Madanlal Judgment stipulated certain principles to be taken into account for grant of bail, the present Article tests the consistency with which such principles are being applied in the post Vijay Madanlal era.

II. SUPREME COURT'S FINDINGS ON BAIL IN THE VIJAY MADANLAL JUDGMENT

By way of the Vijay Madanlal Judgment, the Hon'ble Supreme Court set out the following principles for grant of regular bail under Section 45 of the PMLA:

1. The burden of proof lies on the accused to prove that the accused fulfills the twin test stipulated under Section 45 of the PMLA, i.e. there are reasonable grounds for believing that the accused is not guilty of the offence of money laundering and that the accused is not likely to commit any offence while on bail (“Twin Test”).

2. The Courts are neither required to record a positive finding that the accused has not committed an offence under the PMLA, nor required to weigh the evidence meticulously or delve into the merits of the case. Instead, the Courts should arrive at a finding based on broad probabilities on the material collected during investigation. The Courts should see if there is a prima facie case against the accused.

3. Section 436-A of the Code of Criminal Procedure, 1973 (“Cr.P.C.”) is an exception to the strict compliance of the twin test. As such, if the trial cannot proceed and the accused has undergone one-half of the maximum period of imprisonment provided under the PMLA, the Courts may enlarge the accused on bail. However, the Courts should not grant the said relief mechanically and instead consider the relief on a case-to-case basis and may even impose appropriate conditions to secure the presence of the accused during trial.

4. The Supreme Court noted that the learned Solicitor General had fairly accepted that the mandate of Section 167 of the Cr.P.C. would apply to cases under Section 3 of the PMLA. As consistently held by the Supreme Court, in terms of Section 167 of the Cr.P.C., if the chargesheet is not filed within 60 days of the Magistrate authorizing remand of the accused, the accused would be entitled to default bail.

III. SUPREME COURT JUDGMENTS GRANTING REGULAR BAIL

1. Directorate of Enforcement v. Madhukar G. Angur

Factors taken into consideration:

(a) The accused had spent 2.5 months in custody.

(b) The accused had been granted bail in the predicate offence and anticipatory bail in the connected matters.

Key Takeaways:

(a) The Supreme Court upheld the order granting bail to the accused despite the Enforcement Directorate's submission that the accused had made an attempt to influence witnesses after being released on bail.

2. Ramchand Karunakaran v. Directorate of Enforcement & Anr.

Factors taken into consideration:

(a) The accused had spent more than 3 years in custody.

(b) The Court was yet to take cognizance and frame charges in the proceedings under PMLA.

(c) The accused was a senior citizen.

(d) The co-accused had not yet been arrested.

3. Sanjay Agarwal v. The Directorate of Enforcement

Factors taken into consideration:

(a) The accused had undergone custody for a period of 1 year.

(b) The investigation for the offence under PMLA was still pending.

4. Sanjay Kumar Tiwari v. Union of India

Factors taken into consideration:

(a) The accused had undergone 15 months in custody which is nearly 50% of the minimum sentence that could be imposed for the offence under the PMLA.

(b) The accused undertook to repay the funds to the public sector bank.

5. Ram Pratap Verma v. The State through Directorate of Enforcement

Factors taken into consideration:

(a) The chargesheet had been filed without arresting the accused.

(b) The conclusion of trial was likely to take time.

(c) The co-accused had been enlarged on bail.

6. Manoj Kumar Pattanaik v. DVS Kishore

Factors taken into consideration:

(a) The accused had undergone incarceration for a period of 9 years and 2 months (for the predicate offence and the offence under the PMLA).

7. Enforcement Directorate v. Kapil Wadhawan & Ors

Factors taken into consideration:

(a) The accused persons were remanded to custody on 14.05.2020. As such, the right to default bail under Section 167 of the Cr.P.C. accrued on 13.07.2020 at 12:00 AM (60th day of custody). On that very day, the accused persons filed their applications seeking default bail at 8:53 AM. The Directorate of Enforcement filed chargesheet at 11:15 AM (61st day of custody).

Key Takeaways:

(a) The accused can avail the benefit of default bail U/s. 167 of the Cr.P.C. if chargesheet is not filed within 60 days of the Magistrate authorizing remand of the accused.

(b) The first day on which the Magistrate authorizes remand of the accused shall be included whilst computing the 60-day remand period U/s. 167 of the Cr.P.C.

8. Assistant Director, Directorate of Enforcement v. Pankaj Trivedi

Factors taken into consideration:

(a) Investigation was complete and the proceedings under PMLA were at the stage of framing of charge.

(b) The accused had undergone 3 years of incarceration.

9. Directorate of Enforcement v. Dr. Shivinder Mohan Singh

Factors taken into consideration:

(a) The accused had undergone half of the maximum sentence that could be imposed for the offence under the PMLA.

(b) The apprehension that the accused was a flight risk was taken care of by directing the accused to surrender his passport and in any case, the accused was in custody in the predicate offence.

Key Takeaways:

(a) The Supreme Court upheld the order of the High Court granting bail to the accused despite noting that the said order was based on an incorrect interpretation of Section 45 of the PMLA.

10. Sanjay Raghunath Agarwal v. The Directorate of Enforcement

Factors taken into consideration:

(a) The chargesheet had not been filed in the predicate offence despite a lapse of 9 years.

(b) The accused had undergone incarceration for over 6 months.

(c) The accused had met the twin test.

11. Anosh Ekka v. The Directorate of Enforcement

Factors taken into consideration:

(a) The accused had undergone 5 years 6 months in custody.

12. Jai Narayan Sharma v. Directorate of Enforcement

Factors taken into consideration:

(a) The accused was not named as an accused in the predicate offence.

(b) The accused had undergone incarceration for 1 year 9 months and there was no possibility of the trial commencing anytime in the near future.

13. Bachhu Yadav v. Directorate of Enforcement

Factors taken into consideration:

(a) The investigation was complete, charges had been framed against the accused and the proceeding under PMLA was at the stage of evidence.

14. Kumar Ganjhu v. Union of India

Factors taken into consideration:

(a) The chargesheet was filed without arresting the accused.

(b) The accused had undergone a long period of incarceration.

Key Takeaways:

(a) The Supreme Court observed that in case the accused attempts to delay trial or takes adjournments, it will be open for the competent Court to cancel his bail.

15. Benoy Babu v. Directorate of Enforcement

Factors taken into consideration:

(a) The accused was not named as an accused in the predicate offence.

(b) The accused had spent 13 months in custody whereas the trial had not commenced.

(c) The accused had neither paid nor received any alleged proceeds of crime.

IV. SUPREME COURT JUDGMENTS DENYING REGULAR BAIL

1. Directorate of Enforcement v. Aditya Tripathi

Factors taken into consideration:

(a) Merely because the chargesheet had been filed in the predicate offence and the accused had been discharged therein, the same cannot be a ground to release the accused on bail in the offence under PMLA.

(b) The investigation for the predicate offence and the investigation by the Directorate of Enforcement for the offence under PMLA are different and distinct. The investigation by the Directorate of Enforcement for the offence under PMLA was still underway.

(c) The High Court had erred in granting bail to the accused without considering the twin test.

Key Takeaways:

(a) The accused is not entitled to bail merely on the ground that he has been discharged in the predicate offence. In order to be enlarged on bail for an offence under PMLA, the accused must satisfy the twin test.

2. Manish Sisodia v. Directorate of Enforcement

Factors taken into consideration:

(a) The charge against the accused in the PMLA case, i.e. unlawful gain at the cost of the public exchequer, was prima facie established from the material on record.

(b) The apprehension of the accused that trial would take a long time to conclude was taken care of by the prosecution assuring that it would conclude the trial within 6 to 8 months. However, if the trial does not proceed still, the accused would be entitled to file a fresh application seeking bail.

Key Takeaways:

(a) The benefit of Section 436-A of the CrPC can be given to the accused but the same must be considered on a case-to-case basis.

3. Tarun Kumar v. Assistant Director, Directorate of Enforcement

- Factors taken into consideration:

(a) The statement of witnesses recorded under Section 50 of the PMLA and material on record showed prima facie complicity of the accused for the offence under Section 3 of the PMLA.

(b) The accused cannot claim parity with other co-accused because the accused's role was different vis-à-vis the co-accused who was enlarged on bail. Even otherwise, the order granting bail to the co-accused was under consideration before the Supreme Court.

(c) The accused is not entitled to the benefit of Section 436-A of the Cr.P.C. merely on the asking and same shall be decided on a case-to-case basis.

Key Takeaways:

(a) If there is sufficient material on record to prove the complicity of the accused, the accused would not be entitled to bail merely on the ground that he is not a named accused in the predicate offence and was arraigned as an accused in the PMLA case merely based on witness statements recorded under Section 50 of the PMLA.

(b) The principle of parity, i.e. similarly placed co-accused has been granted bail, is not the law. The Court must satisfy itself about the role of the accused in the alleged offence under PMLA.

(c) Even if investigation is complete qua the accused, the burden of proof lies on the accused to prove that the accused has fulfilled the twin test.

(d) The benefit of Section 436-A of the Cr.P.C. cannot be granted mechanically and must be judged on a case-to-case basis.

4. Saumya Chaurasia v. Directorate of Enforcement

Factors taken into consideration:

(a) The material collected during investigation established a prima facie case under Section 3 of the PMLA against the accused. As such, the accused did not fulfill the twin test.

Key Takeaways:

(a) The categories of persons mentioned in the first proviso to Section 45 of the PMLA, i.e. a person who is under the age of 16 or is sick or infirm or a woman, are not ipso facto entitled to bail. Instead, the Courts should examine the alleged role of such persons and material collected during investigation whilst adjudicating upon bail applications filed by the said category of persons.

(b) The accused will not be entitled to bail merely because the scheduled offence was dropped in the chargesheet. This is so because irrespective of the offence mentioned in the chargesheet, it is the Court that decides whether charge is required to be framed against the accused for the scheduled offence. As such, till such time that the accused is not absolved by a Court of competent jurisdiction by way of an order of discharge or acquittal or quashing of scheduled offence, the accused can be proceeded against under the PMLA.

V. ANALYSIS

A perusal of the factors that have weighed with the Supreme Court for the grant / rejection of regular bail under Section 45 of the PMLA reveal an inconsistency in the approach. For instance, whilst the Vijay Madanlal Judgment held that the benefit of Section 436-A of the Cr.P.C. shall not be given mechanically, the Supreme Court has often granted bail on the mere consideration of the period of custody undergone by the accused, and that too when the accused had not even completed one-half of the maximum sentence that could be awarded under the PMLA. Furthermore, although the Vijay Madanlal Judgment held that once the accused had been absolved of the predicate offence by way of an order of discharge by a competent court of law, the proceedings under PMLA will not survive against the accused, yet the Supreme Court, in one instance, has refused to grant bail despite the accused being discharged in the predicate offence. Moreover, whilst the Vijay Madanlal Judgment is silent on the principle of parity, the Supreme Court has often granted bail on the consideration of the co-accused being granted bail whilst contemporaneously, a co-ordinate bench of the Supreme Court has held that the principle of parity is not the law. Similarly, whilst the Vijay Madanlal Judgment stipulated that the accused must mandatorily fulfill the twin test to be granted bail, the Supreme Court has often granted bail without examining the fulfillment of the twin test by the accused. Notably, the reversal of burden of proof on the accused to prove that the accused fulfills the twin test is itself presently under consideration before the Supreme Court in a review petition filed against the Vijay Madanlal Judgment.

VI. WAY FORWARD

There should be consistency in the application of legal principles governing regular bail under Section 45 of the PMLA. This is so because under Article 141 of the Constitution of India, 1950, all Courts in India are bound to follow the legal principles settled by the Supreme Court in its judgments. Furthermore, from a conjoint reading of Articles 14, 20 and 21 of the Constitution of India, 1950, an accused has a legitimate expectation that the legal principles, as settled by the Supreme Court in its judgments, will be applied equally to his / her unique facts and circumstances, without any discrimination or arbitrariness. Understandably a straight-jacket formula for grant / rejection of regular bail under Section 45 of the PMLA cannot be laid out. This is so because for a grave economic offence such as money laundering, the Courts have to firstly, arrive at a subjective satisfaction about the gravity of offence and the alleged role of the accused; and secondly, balance the right to personal liberty of the accused vis-à-vis the larger public and societal interest. However, a more consistent application of legal principles governing regular bail under Section 45 of the PMLA will certainly result in uniform development of law, reduce the backlog of cases and boost confidence in the Supreme Court.

Note: The scope of the present Article is restricted to analysis of all judgments on regular bail under Section 45 of the PMLA passed by the Supreme Court after 27.07.2022 up till 28.12.2023.

Author is a graduate of West Bengal National University of Juridical Sciences, is an Advocate who practises in New Delhi. She specialises in criminal law including white collar crime. She can be contacted at divyaajhalani@gmail.com.