Legislature Must Relax Rigid Conditions U/S 45 PMLA To Allow Room For Bail Determination On Case-By-Case Basis: Chhattisgarh HC

“This would prevent minor bail cases reaching the apex court as the lower courts are hesitant to oppose the inflexible provision. Nevertheless, the court should also recognize the legislature's wariness towards money laundering and pass orders such that it balances caution with liberty”, a bench of Justice Arvind Kumar Verma further observed.

The single judge added that while money laundering connected to terror financing and other serious offences ought to be treated with great caution and stringency, there are offences that are not as serious as the former, and in those cases as well, the twin conditions apply.

The Court noted that while the legislature's fight against terror funding is a step in the right direction, several cases have been brought where the rights of the accused have been violated due to the actions of a few outliers.

Importantly, the Court also stressed the need to move from the current one-size-fits-all approach towards an approach that underscores the differences between the offences on the basis of their gravity and seriousness.

According to Section 45 of the PMLA, bail can be granted to an accused in a money laundering case only if twin conditions are satisfied - there should be prima facie satisfaction that the accused has not committed the offence and that he is not likely to commit any offence while on bail.

The bench made these observations while denying bail to Anwar Dhebar, the elder brother of Raipur Mayor and Congress leader Aijaz Dhebar, in a corruption and cheating case related to the Chhattisgarh liquor scam.

It is the case of the prosecution that Dhebar took advantage of his political influence and family relations with Anil Tuteja and in association with Arunpathi Tripathi, the Managing Director of CSMCL, lead to increase in the rate of liquor production and supply and in return, gained illegal commissions amounting to lakhs of rupees from the distillery owners.

It has also been alleged that the syndicate, of which Dhebar is a part, received commission from the distillery owners by increasing, parallel manufacturing and supplying duplicate liquor through the F-10-A license.

Before the HC, Dhebar's counsel argued, inter alia, that he is not involved in the commission of or in any activity relating to the alleged offences and that most of the statements relied upon by the ED have been retracted by individuals admitting that they were extracted using coercion and threats. It was also contended that the investigation conducted by the ED was in a pick-and-choose manner.

On the other hand, the prosecution opposed his plea for bail as it was submitted that there is a high likelihood that he, if released on bail, might attempt to frustrate the present proceedings by influencing witnesses or tampering with crucial evidence.

Having heard the counsels for all parties, the Court, in a Prima facie observation, said that the applicant was involved in the criminal acts of the syndicate and is in possession of the proceeds of crime and that he received commission from the liquor suppliers.

“The applicant acted as a strongman who ran the liquor syndicate for his political benefactors in association with the topmost bureaucrat Anil Tuteja. The applicant ran the entire bribe collection racket for Part-A,C and FL-10A license Holders and the unprecedented scam of selling unaccounted liquor from the State run shops. This apart, he was responsible for acquisition of process of crime and concealing them,” the Court remarked in its order.

Regarding rigid twin conditions under Section 45, the Court noted that the top court views this provision from a narrow lens of 'seriousness of the crime' rather than the wider constitutional validity.

It added that though it is within the court's power to deem a provision unconstitutional through judicial review, it can be inferred that the legislature was dissatisfied with the order (of the Apex Court in Nikesh Tharachand Shah case).

For context, in Nikesh Tarachand Shah Vs. Union of India 2017 case, the Apex Court decided against the constitutionality of section 45 of PMLA, 2002 and the twin-conditions of bail attached to it. This led the Parliament to virtually reinstate the rigid condition of bail by amending the PMLA through the Finance Act, 2018.

The Parliament, while retaining the reverse burden of proof, revived Section 45 and added that the presumption of guilt would be regarding the offence of 'money laundering' and not the 'scheduled offence'. The Supreme Court upheld the amendments in the case of Vijay Madanlal Choudhary vs Union of India | 2022 LiveLaw (SC) 633

Regarding the merits of the case, the Court noted that there was substantial material which indicated a strong nexus between the applicant and the other accused persons in the commission of the crime.

“It is thus held that in the investigation conducted during the predicate offence, the applicant being the orchestrator of the entire liquor scam in the State of CG, was involved in money laundering and 58 proceeds of crime along with other co-accused therefore, the entitlement of the applicant to get bail under PMLA, 2002, is not acceptable and considering the entirety of the matter, this Court is of the opinion that the applicant is unable to satisfy twin conditions for grant of bail under Section 45 of the PMLA, 2002,” the bench held as it found him ineligible for grant of bail and thus, his plea was rejected.