Introduction
Before the dawn of the enforcement directorate’s (‘ED’) era, securing bail was as chaotic as a three-ringed circus. Accused persons were, in most instances, granted bail if they fulfilled the triple test doctrine to establish that -
(i) they were not a flight risk,
(ii) they would not influence witnesses, and
(iii) they would not tamper with the evidence.
Once convinced, the concerned Court would subsequently enlarge the accused on bail. However, one fine day, without anyone having the slightest inkling, the rigours of s. 45 of the Prevention of Money Laundering Act, 2002 (‘PMLA’) crept in and dethroned the triple test doctrine to become the circus master.
This may be the right time to discuss the elephant in the room, aka s. 45 of the PMLA, as per which bail is only to be granted subsequent upon the satisfaction of twin conditions, which most might already be weary from. However, to reiterate (and emphasize), bail under the PMLA can only be granted when -
(i) the Public Prosecutor has been given an opportunity to oppose the bail application, and
(ii) subsequent upon the bail being opposed by the Public Prosecutor, the Court is satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence of money laundering and is not likely to commit any offence during his enlargement.
A bare reading of the twin conditions, more precisely the second one, would be enough to weigh in with the mahout of the elephant in the room, viz., the Court.
The use of twin conditions for bail is not a new concept. It has been used to restrict bail in serious offences under acts like the Maharashtra Control of Organized Crimes Act, 1999 (‘MCOCA’), Unlawful Activities Prevention Act, 1967 (‘UAPA’), or Narcotic, Drugs and Psychotropic Substances Act, 1988 (‘NDPS’). However, its application to offences under the PMLA is relatively new but significantly more impactful. The widespread use of s. 45 of the PMLA has effectively overturned the established bail jurisprudence of the country, particularly in cases of economic offences, where jail time has become the norm.
The PMLA became impenetrable, and bail became impossible if and when the elephant was involved. After several months of denial, rejection, and agony, the seniormost of the mahout was finally able to concur and control the elephant, which had almost dealt the ex-deputy CM of Delhi, Mr. Sisodia, the final deadly blow.
Mr. Manish Sisodia was recently granted bail by the Hon’ble Supreme Court for offences allegedly committed under the PMLA. The feat appeared to be historical, especially considering that it was not one but two battles that Mr. Sisodia won: the first was the revival of his bail, which saved him from being under custody for another couple of months at least, and the second was his bail under the PMLA.
What looked like a stray incident of the Supreme Court taming the elephant took a rather serious, however pleasant (& acceptable) course, with the Hon’ble Supreme Court continuing to take strides at the oh-so-formidable s. 45 of the PMLA and several other bails were granted under the PMLA. What caught our attention, however, were the observations made by the Court – crisp, crumbling and conscious. The two most important orders passed by the Supreme Court are discussed below:
a. The (K)urious case of (K)Kavitha
Highly qualified and well-accomplished, having significantly contributed to politics and social work. These are some of the ‘heartening’ observations made by the Hon’ble Delhi High Court while rejecting Ms. Kavitha’s bail, who was denied the benefit of the proviso of s. 45 of the PMLA (‘Proviso’).
The matter reached the Supreme Court, wherein while arguing the matter on merits, Ms. Kavitha’s counsel made an obvious submission, which, inter alia, turned out to be a game changer not only for Ms. Kavitha, but also for all the other women languishing in jail under the PMLA. ‘The Appellant is a woman entitled to special treatment under proviso to s. 45(1)’, the counsel submitted. After much ado about nothing by the opposing counsel, the Court further explained the Proviso, its meaning and interpretation. Still, before we take note of the observations made by the Court, we shall briefly understand the Proviso.
What made the elephant enchanting was its tusks (aka the Proviso). It adds to the beauty (& rigour) of the elephant. However, nearing it, one realizes its potential to cause damage and disruption. The same is the case with the Proviso, which, from a distance appears to permit certain categories of accused, including women, to be released on bail sans satisfying the twin conditions. However, a closer look and in-depth understanding of the same reveals that the benefit of such exemption may not automatically be granted to the accused who are (i)women, (ii)sick and infirm persons, and (iii) persons under the age of 16 years, and the entitlement of such exemption would depend upon the factual matrix of each case.
Myriad interpretations were being given to the Proviso; however, none was made to further the special treatment provided for by the statute itself. Even in Ms. Kavitha’s case, the Hon’ble Delhi High Court, while dismissing her bail, held that she is not entitled to the benefit of the Proviso as she could not be equated to a ‘vulnerable woman’ [i] in light of her accomplishments and achievements.
‘An erroneous observation,’ the Supreme Court observed, and further noted that the ratio in Saumya Chaurasia’s case is not to be read and understood to mean that the benefit of the Proviso is only applicable to a ‘vulnerable woman’. A woman is not disentitled from availing the benefit of the Proviso merely because she is educated, sophisticated, accomplished or an MP or MLA. With such essential and long overdue noting, the Supreme Court thus granted bail to Ms. Kavitha, reestablishing that the fundamental right of liberty provided under a. 21 of the Constitution of India (‘Constitution’) is superior to statutory restrictions.
At this juncture, the elephant was, so to say, only slightly wounded, with its tusks being clipped to restore sensitization and sympathy towards the persons who are of tender age, sick, and/or women and are likely to be made scapegoats in such offences due to their vulnerability. Not even a day had passed when suddenly the injured yet tall and mighty elephant collapsed after the most abled mahout enlarged another PMLA accused on bail, making observations capable of restoring the motto ‘bail is the rule, and jail is an exception’ to it full glory, especially where the PMLA is concerned. The said case has been discussed herein below:
b. The prolonged case of Prem
The Supreme Court has been on a spree to deliver justice (read as bail), especially in the PMLA cases, wherein up until the passing of the pensive bail order in the case of Prem Prakash[ii], the rigours of s. 45 overrode the historically established bail jurisprudence. However, with the passing of the bail order in the alleged ‘Jharkhand CM aide’s’ case, the Supreme Court has ably tamed the elephant.
The exuberance arising from Mr. Prem’s bail would fade sooner than later. However, what would loudly jingle for the times to come are the observations made by the Supreme Court in his bail. The observations have restored the bail jurisprudence to its original glory, to say the least, and however ironic it may sound, the order and the observations made thereunder have freed bail from the shackles of the PMLA.
While the elephant recovers and recoups (maybe), we analyze the Supreme Court’s order, which is bifurcated into 7 parts, each highlighting certain key observations:
i. S. 45 of the PMLA and its contours: Restriction v. Restraint
Revisiting the observations made in Vijay Madanlal Chaudhary’s[iii] case, the Court, while clearing the air around the nature of s. 45 of the PMLA observed it as restrictive but not restraining in nature, i.e., s. 45 does not disallow a person from seeking bail; however, it imposes certain conditions to be met before bail under such section is granted.
The conditions precedent are our very own twin conditions, and subsequent upon its satisfaction, an accused may be enlarged on bail. However, an important clarification given to the Court pertaining to the standing of s. 45 of the PMLA vis-à-vis a. 21 of the Constitution, and in such regard, while referring to Manish Sisodia’s[iv] judgment, the Court observed that the constitutional mandate is the higher law. When an accused is deprived of his right to a speedy trial for reasons not attributable to him, the Court should exercise its power to grant him bail. In such a scenario, thus, the rigours of s. 45 of the PMLA can suitably be relaxed to accommodate conditional liberty.
ii. Scope of enquiry under s. 45 of the PMLA
The phrase ‘reasonable grounds for believing’ is used under s. 45 of the PMLA has been interpreted in a manner so stringent that the grant of bail becomes impossible. The Court (s) has been weighed down by the belief that satisfying the second twin condition to state that there are reasonable grounds for believing that he is not guilty is equivalent to writing an order of acquittal without the trial having commenced.
At multiple instances, the Supreme Court has, while clarifying the legislative intent, stated that using the words ‘reasonable grounds for believing’, i.e., giving reasons, is different from discussing the merits and/or demerits of the case[v]. At the stage of bail, there is neither any burden on the accused to establish his innocence beyond a point of doubt, nor is the prosecution burdened to prove the charge beyond reasonable doubt.
Re-asserting the established, however, forgotten jurisprudence, the Supreme Court, while reproducing the observations made in Vijay Madanlal Chaudhary (supra), noted that while dealing with applications for grant of bail under the PMLA, Courts ought not to look at the merits of the case, and bare perusal of the material(s) available on record is sufficient to allow/reject a bail[vi].
iii. Importance of foundational facts under s. 24 of the PMLA
Referring to Vijay Madanlal Chaudhary’s case, the Supreme Court discussed the onus of rebutting the legal presumption under s. 24 of the PMLA arises only after the prosecution established the foundational fact(s) that proceeds of crime exist and the accused person is directly or indirectly involved in any process or activity connected in addition to that.
Thus, establishing the aforementioned foundational facts is a prerequisite that the prosecution ought to establish. The legal presumption under s. 24 of the PMLA would only apply to a person charged with the offence of money laundering, and his direct/indirect involvement with the proceeds of crime is established.
iv. Counter to the bail and its importance
In pursuance of the importance of the three basic foundational facts stated in the preceding paragraphs, the Court elaborated upon the importance of the counter to the bail application filed by the accused before the primary/original Court. Such counter affidavit should, thus, make a cogent case as to how the aforementioned foundational facts are established qua each case to help the Court arrive at a conclusive decision regarding the grant/ rejection of bail.
Only after the investigating agency/prosecution has crystalized, although only briefly, the material they relied upon to prima facie establish the three foundational facts would the presumption under s. 24 of the PMLA arise, and the burden of proof shifts onto the accused.
v. Admissibility of the statement of the Appellant while in custody
During arguments, the Court was taken through the summary of the statements of several accused persons, including Mr. Prem. Differing from the established bail jurisprudence, wherein the detailed examination of evidence and/or documentation ought not be undertaken during bail hearings, the Supreme Court proceeded to give the Prosecution a patient hearing.
In this instance, though the Court traversed a path much different from that laid down by its ancestors, what followed was a smart move. After observing that no prima facie case of money laundering was made out against Mr. Prem, a question was asked, ‘When a person is in judicial custody in another case investigated by the same Investigating Agency, whether the statements recorded for a new case in which his arrest is not shown, and which are claimed to contain incriminating material against the maker, would be admissible under section 50?’
Despite making observations favouring Mr. Prem’s case, the Court moved on to examine the above moot question. Position, check and yet another goal - the statements made by Mr. Prem, the Appellant, would be hit by the provisions of s. 25 of the Indian Evidence Act, 1872 (‘Evidence Act’), since they were given whilst in judicial custody, pursuant to other proceedings initiated by the same investigating agency, aka ED, the Supreme Court observed.
The observations stem from the established belief that a person in custody, pursuant to another proceeding being investigated by the same agency, cannot be considered to be operating with a free mind, and to allow the admission of such statements would be antithetical to the established principles of fair play and justice.
Sharper and far more farsighted than the elephant, the Supreme Court had foreseen a situation wherein the protection of s. 25 of the Evidence Act may have to be made available to the accused under the PMLA on a case-to-case basis. Established through Rajaram Jaiswal’s case[vii], the test for determining whether an officer is a ‘police officer’ as per the tenets of s. 25 of the Evidence Act was reiterated in Vijay Madanlal Chaudhary’s case, which meant that any officer has the power to facilitate obtaining a confession from a suspect or delinquent.
But we ask, was the environment conducive to obtaining a confession? The Court stepped in to resolve the ‘Did it happen v. Could it happen’ debate, observing that the prosecution/ED was in a dominating position. Mr. Prem’s position was already compromised, considering his incarceration, which was by the ED itself in a different PMLA matter. The ‘could’ far outweighed the ‘did’, making the environment conducive to obtaining a confession.
A sharp sensation pierced through the elephant, and he screeched. We wonder what could have hurt the elephant, except its own tusks, as wisdom only hurts when it reaches the too(ru)th!
vi. Criminal antecedents and their impact on bail
Once again, it was argued that Mr. Prem does not have clean antecedents. His hands have been dirtied by the illegal stone mining activities being conducted in Saheb Ganj, Jharkhand, and he has been incarcerated since 2022 for the alleged commission of such an offence. But can he be denied bail based on the pendency of the other matter, pending adjudication before the Supreme Court? Before the prosecution could proceed to answer the question, the Court’s answer explained that it was rhetorical.
Observing that the trial was yet to commence and Mr Prem had already spent over a year in custody, the Supreme Court could not determine the basis for further detention.
vii. Misuse of jail facilities
In the final minutes before surrendering (SURRENDERING!) before the Mahout, boastful and elaborate submissions were made to apprise the Court about Mr. Prem’s jail time. The ED alleged that certain facilities were extended to the accused in jail (and he still wanted bail!?).
Sighing, the onlookers struggled to differentiate between whining and submissions. Enduringly, the Court refused to comment on the aforesaid situation, asking the ED to take such an issue up with higher prison authorities.
The ED's array of reasons was insufficient to convince the Supreme Court to continue denying the Appellant his personal liberty. Battling the elephant and this sharpened tusk, the abled Mahout was able to bring it under control, which was long overdue.
Note of Closure: A Successful Restoration
To have witnessed the (brutal) injury to bail jurisprudence and its (miraculous) redemption feels surreal, to say the least. Bail in matters of economic offences became a rarity, especially in light of the twin conditions, aka the elephant, which solidified the incarceration of the accused to an indefinite extent, so much so that they could be renamed as mammoths whose lives were frozen in jails instead of the picturesque arctics.
While the collapse of such a painstakingly developed bail structure was bothersome – especially considering how it violated one’s right to life and personal liberty – its revival with the passing of the aforementioned two orders, amongst certain others, assures us of the strength and steadiness with which it resurges.
The orders make no new observations per se. Established jurisprudence has been recycled to fit into the factual matrix of the aforementioned cases in alignment with the constitutional provisions, particularly the salutary principle of a. 21 of the Constitution, which states that no person shall be deprived of his right to life or personal liberty except according to the procedure established by law.
While the pomp around the bail would eventually fade, the thoughtful analysis will continue to earn recognition with each read. What brings comfort at this moment is the sound interpretation of bail jurisprudence, which restores faith in the judicial process by rejecting baseless or unsubstantiated claims and disallowing any statutory provision, be it s. 45 of the PMLA or s. 21 of the MCOCA, from rewriting principles of bail jurisprudence to mean that deprivation is the norm and liberty is the exception.
End Notes
[i] The word vulnerable women was used by the Hon’ble Supreme Court in Saumya Chaurasia v. Directorate of Enforcement (2024) 6 SCC 401.
[ii] SLP (Crl.) No. 5416 of 2024, Prem Prakash v. Directorate of Enforcement.
[iii] (2022) SCC OnLine SC 929, Vijay Madanlal Chaudhary & Ors. V. Union of India.
[iv] Crl. Appeal No. 3295 of 2024, Manish Sisodia (II) v. Directorate of Enforcement.
[v] (2004) 7 SCC 528, Kalyan Chandra Sarkar v. Rajesh Rajan.
[vi] (2005) 5 SCC 294, Ranjitsing Bharmajeetsing Sharma v. State of Maharashtra and Anr.
[vii] AIR 1964 SC 828, Rajaram Jaiswal v. State of Bihar.
Authored by Anshi Bhatia, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.