~By Devvrat Singh and Nishita Gupta
Introduction
The Prevention of Money Laundering Act (hereinafter referred to as PMLA) was enacted in 2002 and since then it has undergone several amendments. The stated object of PMLA was to combat money-laundering activities and confiscate the properties involved in or connected to the act of money laundering. Several provisions of the PMLA were challenged before the Apex Court in the case titled Vijay Madanlal Choudhary Vs. Union of India. In this case, the Supreme Court considered the provisions relating to the wide investigative privileges of the Directorate of Enforcement (hereinafter referred to as ED), the herculean bail conditions, the powers of search and seizure under PMLA, the status of ED officials vis-à-vis police officers, etc.
The Apex Court upheld all the provisions that were under challenge. However, the verdict is attracting sharp criticism for its apparent acceptance of a narrow and executive minded interpretation of law with respect to various provisions that were under challenge. It has been pointed out that the judgement grants judicial approval to the arbitrary and draconian provisions of PMLA that further gives rise to apprehensions of misuse of the law and lack of protection to citizens.
One such provision whose constitutionality was challenged before and ultimately upheld by the Apex Court was section 45 of the PMLA, which deals with the grant of bail to an accused person arraigned under the provisions of the act. The twin bail conditions under PMLA were challenged before the apex court on the grounds of them being violative of article 14 and 21 of the constitution. This article aims to analyze the ruling of the court and its rationale while upholding the constitutional validity of bail provisions under the PMLA.
The Twin Conditions and the Nikesh Tarachand Judgement
The original twin conditions incorporated under section 45 of PMLA prohibited the grant of bail to a person accused of an offence under part A of the schedule carrying a punishment of imprisonment for more than 3 years unless –
- The public prosecutor has been given an opportunity to oppose the bail application and;
- Where after hearing the public prosecutor, the court believes that the accused is not guilty of the offence complained of and is not going to commit any crime while on bail.
The above-mentioned conditions were challenged before the Apex Court in Nikesh Tarachand Shah Vs Union of Indiaand were struck down on the ground of them being violative of article 14 of the constitution. It was held by the Apex court that the bail conditions led to a situation wherein the accused person would end up facing different results with respect to his bail application depending upon the applicability of section 45. It is noteworthy that the scheduled offences under the act were found to be not connected with the grant or rejection of bail but the mere act of trying a person for the offence of money laundering alongside the scheduled offences under part A invited the force of section 45 and led to the denial of bail. However, where an accused person is not tried for the offence of money laundering rather only for offences under part A of the schedule, in such a scenario the accused is entitled to obtain the bail without satisfying the twin conditions. The court further pointed out that the bail conditions suffered from the vice of arbitrariness and were manifestly discriminatory and therefore the same needed to be struck down.
Interestingly the Apex Court noted that unless there is a compelling state interest, these bail conditions would also violate the guarantee of life and personal liberty enshrined under article 21 on the ground that they are disproportionate and excessively harsh, however the court did not explicitly state whether or not there existed a compelling state interest under PMLA.
It is pertinent to mention that the government sought to revive the twin conditions by amending section 45 of PMLA via the Finance Act of 2018 and this amendment was challenged in the Vijay Madanlal Choudhary case.
Analysis of the Twin Pre-Bail Conditions
It is respectfully submitted that the court while upholding the constitutionality of the twin conditions of bail has erred on several aspects by choosing to overlook some well settled principles of law.
Reversal of the presumption of innocence – “Innocent until proven guilty” is a truism that forms the cardinal principle of criminal jurisprudence. However, several special criminal statutes like PMLA conveniently reverse this presumption of innocence by the force of legislature and binds the judiciary to assume the guilt of an accused. Section 45(1) of the PMLAprovides for such presumption of guilt and an inverted burden of proof at the stage of bail. The error apparent herein is that it would be impossible for any accused to prove at the stage of bail that he is innocent of the charges levelled against him. It is also noteworthy that the accused is also not entitled to the Enforcement Case Information Report (hereinafter referred to as ECIR; ECIR is equivalent to FIR) on the ground that it is an internal document of the ED. The Apex Court while upholding the validity of the provision failed to appreciate the predicament that the accused is faced with when he is called upon to prove his innocence at the stage of bail especially when he is not provided with any material till the stage of framing of charges.
The Apex Court in Arnab Goswami’s case had categorically held that the principle of presumption of innocence applies to bail proceedings as well. On the contrary the accused under PMLA (at the stage of bail) has the burden to prove that he is not guilty of the offence which in most of the cases would be impossible to discharge because of the very fact that the accused is not even in possession of the material that the ED is using to incriminate him. It is noteworthy that the accused is informed only about the grounds of arrest and he is not provided any other document based on which the ED seeks to arrest him. Such application of section 45 would lead to a situation that would invariably cause the denial of bail and would thereby bring about grave injustice to the accused.
It is submitted that such draconian provisions that attempt to reverse the presumption of innocence strike directly at the core of Article 21 as they defy the well-settled principles of criminal jurisprudence.
Absence of a Fair and Reasonable Procedure – Fair and reasonable procedure forms a part of constitutional scheme under Article 21. In extension to what has already been explained above, it is further submitted that fair and reasonable procedure is quite conspicuous by its absence under the PMLA when it comes to grant of bail and even under various other provisions that largely affect the grant of bail to the accused. An example of this is section 19 that empowers the ED official to arrest the person based upon his subjective satisfaction based on whatever material is in his possession and there is no provision for providing the accused with the material that incriminates him. Section 19 only lays down that the official effectuating the arrest will tell the accused the grounds of his arrest (which in most cases are vague) as soon as possible; this can hardly be deemed to be any kind of safeguard.
Hypothetically speaking even if the accused is handed over all the documents that the ED is relying upon, even then the accused will not be able to prove his innocence at the stage of bail because the accused is not entitled to produce any material or document in his defense. It goes without saying that the material relied upon by the ED would only include incriminating material and not exculpatory material. Furthermore, if the material relied upon by the ED includes any kind of witness statements recorded under section 50 of the PMLA, it wouldn’t be possible for the accused to rebut the same at the stage of bail because that is only possible at the stage of cross examination. Therefore, it can rightly be argued that the accused is prevented from preparing a credible defense for himself.
Violation of Article 14 – It is submitted that the twin conditions also violate the mandate of Article 14. It is evident on comparison that IPC provides for several serious offences where the punishment is as severe as death penalty or life imprisonment but there are no restrictive bail conditions for offences under IPC. However, under section 4 of PMLA it is stated that the maximum punishment for the offence of money laundering is 7 years (10 years in select NDPS offences) and the accused under PMLA would have to satisfy the restrictive bail conditions. Therefore, the mere invocation of PMLA virtually places the accused on an altogether different footing as compared to a person who has been booked under IPC and who can obtain bail much easily. It is noteworthy that a person applying for anticipatory bail will also have to satisfy the twin conditions. Therefore, such bail conditions are manifestly discriminatory and disproportionate and fall foul of the protection provided under Article 14.
Non rectification of the defect pointed out by the Supreme Court – One of the most crucial arguments that the Apex Court failed to appreciate in its judgement in Vijay Madanlal Choudhary case is that the amendment introduced to section 45 by the Finance Act of 2018 fails to rectify the defect pointed out by the Supreme Court in Nikesh Tarachand Shah judgment while striking down the twin conditions. The Apex Court struck down the twin conditions on the ground that it reverses the presumption of innocence. The 2018 act did not rectify this defect and instead focused on dissociating the predicate offence with bail conditions while retaining the reversed presumption of innocence. Therefore, the amendment did not cure the infirmity which led to it being declared unconstitutional i.e., the violation of Article 21.
Are There Any Safeguards Under PMLA
The arguments advanced in the defense of the twin conditions relied heavily on the fact that economic offences constitute a class apart as they pose a great risk to the economic health of the country and therefore such harsh bail conditions are justified. Furthermore, it has been argued that the provision providing for arrest lays down certain inherent safeguards. Section 19 lays down that arrest can only be effectuated by officers of a certain rank; Arrest can only be made if there is “material in possession”; arrest to be made only if there is reason to believe that the accused is guilty of the offence of money laundering; the reasons for arrest to be recorded in writing; the accused to be informed of the grounds of his arrest; duty of the officer to forward the copy of arrest and the material that he is having in his possession; the production of the accused before the special court.
It is submitted that all the aforementioned points that are touted as safeguards are mostly general provisions, which can be traced under the Cr.P.C as well. The wider point that the apologists of the provisions want us to overlook is the fact that these provisions constitute no special safeguards and similar procedural formalities are found under almost all criminal laws. But even if for a brief moment we consider these procedures as extraordinary safeguards protecting the accused, we still cannot underplay the fact that the twin conditions in their operation would reduce the chances of the accused to secure bail to a vanishing point because of the practical problems that have already been explained earlier.
Conclusion
It is submitted that the authors appreciate the objectives of PMLA i.e., to tackle the menace of money laundering. However, even if the object of a particular legislation is laudable, its validity must be adjudged by the manner of its operation and the end effect that it will carry on the rights of the accused. Bail in criminal trials is one of the biggest reliefs that the accused can obtain but the PMLA in its operation severely restrict the right of the accused to obtain bail by reversing the presumption of innocence and by placing him under the burden of proving his innocence right at the stage of bail. Furthermore, the fact that it is practically impossible to prove one’s innocence without having the knowledge of the material being used to incriminate him cannot be ignored.
The government while defending the PMLA has substantially disregarded the right to personal liberty by projecting it as subordinate to the larger state interest and this view was also endorsed by the Apex Court in its judgement but it fails to appreciate the fact that the twin conditions would make serious inroads in the personal liberty of the accused individual and would subject him to unreasonable hardship. It is respectfully submitted that the view adopted in Vijay Madanlal Choudhary vs the Union of India with respect to the constitutionality of the twin conditions requires to be relooked by the Supreme Court otherwise the twin conditions in their current form would cause inexorable plight to the accused. A review petition has been filed in the Apex Court and the court has also agreed on revisiting its judgement with regards to the twin conditions we must therefore wait for the Apex Court’s judgement and see whether it chooses to reverse the apparently erroneous interpretation laid down in Vijay Madanlal Choudhary’s case or not.
[The authors of this blog are 4th year students at Symbiosis Law School, Noida]
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