Supreme Court Reiterates To Make ‘Jail An Exception’ In PMLA Cases

The subject of bail under Prevention of Money Laundering Act, 2002 (PMLA) has been cantankerous. While the earlier judgments were primarily tilted towards making Jail a rule, a sudden shift is visible in recent judgments where while relying on previous rulings, a more liberal view is taken.

Only yesterday, a judgment delivered by the Hon’ble Supreme Court in Prem Prakash v. Union of India through ED^[1] made the position clearer for bail for offences under Sections 3 & 4 of the PMLA. Without delving into the facts of the case, the major issue was with respect to the twin conditions of bail u/s 45 of PMLA. Interestingly, Sec. 45(1) provides for the Public Prosecutor to be accorded an opportunity to oppose the Bail Application. While the Court is to be satisfied that there are reasonable grounds made out to prove that the accused is not guilty of the offence, the twin condition also includes that there should be no apprehensions that he will commit similar or other offences while being out on bail.

The emphasis of the judgment has been on ‘Bail is Rule and Jail is an exception’ which is contrary to what was held in Vijay Madanlal Choudhary^[2]. The judgment clearly states that being in jail should not become punishment without trial. Reliance was placed on Manish Sisodia^’s^[3] case where the accused was under custody for many months and there seemed no likelihood of trial being completed anytime soon.  Looking at the scope of inquiry u/s 45 of PMLA, it was also observed that the Courts were not to delve deeper into the merits of the case^[4] but if there were reasonable grounds of believing that there is a genuine case against the accused based on available material on record, the bail can be denied. 

Coming back to the issue of filing Reply or Counter to the Bail Application, it was clearly indicated that such Counter should provide a reply to the three conditions as set out u/s 24 of PMLA. First, that criminal activity relating to the scheduled offence has been committed; Second, property has been derived, directly or indirectly, because of criminal activity; and thirdly, person concerned was involved, directly or indirectly, to the property being purchased through proceeds of crime.

A very interesting point of law discussed in the said judgment is when an accused is in custody in another case by same Investigating Agency; the statements recorded during the said period for a new case in which his arrest is not shown yet, and which may contain incriminating material against the maker of such statement, would it be admission under Sec. 50?

This also brought to notice the discussion on who would be considered as ‘police Officer’- will it be strictly upon the definition as laid down in Rajaram Jaiswal^[5]in view of Sec. 25 of the Evidence Act or; as has been held in Vijay Madanlal Choudhary  demonstrating that authorities under PMLA are not police officers and that protection as anticipated in Section 25 of Evidence Act, should be made available to accused. However, such situation is to be observed on case-to-case basis. 

In the instant case, since the accused was under judicial custody pursuant to other proceedings instituted by same investigating agency, any statement given by him which is incriminating against the maker will be hit by Sec. 25 of the Evidence Act.  The Hon’ble Court observed that the accused would be in a vulnerable position when under custody and the Investigating Agency will be in a dominating position and therefore, it was possible that a confession could be taken since there was a conducive atmosphere to obtain one.

Similarly, the co-accused made statements implicating the accused person. It is worthy to note that neither the ECIR nor the FIR which contained predicate offence, disclosed the name of the accused anywhere. Only because of statement of the co-accused which was incorrectly considered as substantive evidence, and despite no incriminating evidence found against the accused, a case was being made by the Prosecution. The Hon’ble Court indeed pointed out that the Prosecution was required to ‘marshal the evidence against the accused excluding confession and conviction should be based on it.’

While granting the bail, the twin conditions were found to be satisfied. The Court held that there were no reasonable grounds that showed that accused was guilty and it further observed that it was satisfied that the accused will not commit any offence in future. 

In conclusion, to uphold personal liberty, the need is for it to be tested on the touchstone of Article 21 of the Constitution being an integral part. This judgment clarifies the position of bail jurisprudence in PMLA matters specially as guaranteed under Article 21 and as protected by Article 22 of the Constitution.

Pallavi Pratap

Guest Author Pallavi Pratap is an Advocate-on-Record in the Hon’ble Supreme Court of India.