BNSS Provision Capping Maximum Undertrial Term Applies To PMLA : Supreme Court Grants Bail

The Supreme Court on Friday (October 18) granted bail to Badshah Majid Malik, an alleged red sanders smuggler, in a money laundering case under the Prevention of Money Laundering Act (PMLA), 2002.

A bench of Justice Abhay Oka and Justice Augustine George Masih granted bail on the ground that he had served more than one-third of the maximum sentence for the offence as per the first proviso to Section 479(1) (Maximum Period for Detention of Undertrial Prisoners) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

The Supreme Court relied on the judgment in the case of Vijay Madan Lal Choudhary, which held that the beneficial provisions of Section 436A of the CrPC, would apply to prosecutions under the PMLA since Section 436A was introduced after the enactment of the PMLA. Therefore, the Court ruled that the corresponding provision, Section 479(1) of the BNSS, would similarly apply to prosecutions under the PMLA.

“It is held in the case of Vijay Madan Lal Choudhary that the beneficial provision of section 436A of the Code of Criminal Procedure, 1973 will apply to prosecution under PMLA as section 436A has come on statute books subsequent to enactment of PMLA. Therefore, the corresponding provision, namely, section 479(1) of BNSS will apply to prosecution under PMLA. In the facts of the case the appellant has undergone incarceration for a period of two years and 11 months. The maximum sentence for the offence alleged against the appellant is of 7 years imprisonment. In the facts of the case it is not disputed that the appellant has not been convicted of any offence in the past. Therefore first proviso to section 479(1) will apply to this case as admittedly the appellant has undergone detention for period of more than one third of the maximum period of imprisonment provided for the offences alleged against him.”

Section 479(1) provides that if an undertrial has been detained for up to half of the maximum imprisonment period for the offence, he should be released on bail, unless the offence involves death or life imprisonment.

The first proviso provides that a first-time offender (someone with no prior convictions) can be released on a bond if he has been detained for one-third of the maximum imprisonment period.

Malik is accused of smuggling red sanders and laundering the proceeds from these activities. The ED has accused Malik of misdeclaring export consignments using forged documents and shell companies to cover his illegal activities. The Bombay High Court had rejected Malik's bail application.

The court noted that Malik had no prior convictions, making him eligible for the application of the first proviso to Section 479(1) of BNSS, as he had served more than one-third of the maximum imprisonment period for the offences.

The Directorate of Enforcement opposed the bail application and urged the court to consider the second proviso to Section 479(1). The second proviso provides that the court may, after hearing the public prosecutor and providing written reasons, order the continued detention of an undertrial beyond half the maximum sentence.

The ED argued that the allegations against Malik involved smuggling of red sanders, a rare and protected wood species.

However, the court noted that the maximum sentence under the predicate offence, which was charged under Sections 132, 135(1)(a)(ii), 135(1)(b)(ii), read with Section 140 of the Customs Act, 1962, was only three years. Hence, the court found that the second proviso did not apply in this case.

The court allowed Malik's appeal and directed that he be produced before the special court within one week for release on bail. The special court was ordered to set appropriate terms and conditions for Malik's release pending the final disposal of the case.

Background

Malik and his associates are accused of smuggling 7.8 metric tons of red sanders in 2015, worth Rs. 3.12 crores, by misdeclaring them as fabric glue, radiators, and other items. Before this seizure, Malik's syndicate allegedly smuggled 17 other consignments of red sanders valued at Rs. 47 crores.

The prosecution claimed before the HC that Malik had a history of similar offences, including a 2005 arrest for smuggling involving forged documents to misuse duty drawback claims.

The ED has alleged that Malik laundered the proceeds of crime through shell companies and personal accounts, particularly using his company Empire India Multitrade Pvt. Ltd. The ED claimed that between 2011 and 2017, approximately Rs. 9.86 crores were transferred to Malik's personal accounts.

Malik sought bail of the ground of undue delay in the trial, violating his right to a speedy trial.

Case no. – Crl.A. No. 4258/2024 

Case Title – Badshah Majid Malik v. Directorate of Enforcement 

Citation : 2024 LiveLaw (SC) 835

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