45 (A) Of PMLA Arbitrary

Source: The Hitavada      Date: 27 Nov 2017 14:21:47


 

 

 

 

 

 

 

 

 

 

Now in its present avatar of section 45, a person who may have nothing to do with the offence of money-laundering may yet be denied bail, because of the twin conditions that have to be satisfied under section 45(1) of the 2002 Act. But still he may be prosecuted for an offence which falls within Part A of the Schedule, but which does not involve money-laundering.

In the judgement of the case Nikesh Tarachand Shah v. Union of India & Another with three other criminal writ petitions along with three criminal appeals arising out of Special Leave Petitions (Criminal), delivered on November 23, 2017, Justice R.F. Nariman and Justice Sanjay Kishan Kaul, at the Supreme Court, have declared section 45(1) of the Prevention of Money Laundering Act (PMLA), 2002 unconstitutional, to the extent it imposes two further conditions for release on bail, as those violate Articles 14 and 21 of the Constitution of India.


All the matters pending before the Apex Court in which bail was denied, because of the presence of twin conditions contained in section 45, will be sent back to the respective Courts which had denied bail. All orders of refusing bail have been set aside, and the cases have been remanded to the respective Courts to be heard on merits, without application of the twin conditions contained in section 45 of the 2002 Act.


In view of persons languishing in jails and that the personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision. With these directions flowing from the judgement , these cases have been disposed of accordingly.
Through these petitions and appeals legal challenge has been posed to the constitutional validity of section 45 of the PMLA, 2002. Section 45(1) imposes two conditions for grant of bail where an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule to the Act is involved.


The conditions are that the Public Prosecutor must be given an opportunity to oppose any application for release on bail and the Court must be satisfied, where the Public Prosecutor opposes the application, that there are reasonable grounds for believing that the accused is not guilty of such offence, and that he is not likely to commit any offence while on bail.


The PMLA of 2002 was introduced to make money laundering an offence. Though the Act was passed by Parliament in the year 2002, it was brought into force only on July 1, 2005.
The change made by section 45 of the Act is that, for the purpose of grant of bail, what was now to be looked at was offences that were punishable for a term of imprisonment of three years or more under Part A of the Schedule, and not offences under the 2002 Act itself.


By the Amendment Act of 2012, a very important amendment was made to the Schedule by which the entire Part B offences were transplanted into Part A, so that the provision of monetary threshold does not apply to the offences.
By the Finance Act of 2015, though section 145, the limit of Rs. 30 lakhs in section 2(y) was raised to Rs. one crore and in the Schedule after Part A, Part B was populated with only one entry, namely section 132 of the Customs Act.


In its original avatar, as clause 44 of the 1999 Bill, the section only dealt with offences under the Act itself. Now in its present avatar of section 45, a person who may have nothing to do with the offence of money laundering may yet be denied bail, because of the twin conditions that have to be satisfied under section 45(1) of the 2002 Act. But still he may be prosecuted for an offence which falls within Part A of the Schedule, but which does not involve money laundering. Such offences would be liable to be tried under the Code of Criminal Procedure, and despite the fact that it may be the very same Part A scheduled offence, the fact that no prosecution for money laundering along with the said offence is launched, would enable the concerned person to get bail without the rigorous conditions contained in section 45 of the 2002 Act.


All the examples show that manifestly arbitrary, discriminatory and unjust results would arise on the application or non-application of section 45, and would directly violate Articles 14 and 21, inasmuch as the procedure for bail would become harsh, burdensome, wrongful and discriminatory depending upon whether a person is being tried for an offence which also happens to be an offence under Part of the Schedule, or an offence under Part A of the Schedule together with an offence under 2002 Act.


Obviously, the grant of bail would depend upon a circumstance which has nothing to do with the offence of money laundering. On this ground alone, section 45 would have to be struck down as being manifestly arbitrary and providing a procedure which is not fair or just and would, thus, violate both Articles 14 and 21 of the Constitution.


Another interesting feature of section 45 is that the twin conditions that need to be satisfied under the said section are that there are reasonable grounds for believing that the accused is not guilty of “such offence” and that he is not likely to commit any offence while on bail. The expression “such offence” would be relatable only to an offence in Part A of the Schedule. Thus, in an application made for bail, where the offence of money laundering is involved, if section 45 is to be applied, the Court must be satisfied that there are reasonable grounds for believing that he is not guilty of the offence under Part A of the Schedule, which is not the offence of money laundering, but which is completely different offence.


In every other Act, where these twin conditions are laid down, be it the TADA or NDPS Act, the reasonable grounds for believing that the accused is not guilty of the offence is in relation to an offence under the very Act in which such section occurs , like section 20(8) of TADA and section 37 of the NDPS Act. It is only in the 2002 Act that the twin conditions laid down do not relate to an offence under the 2002 Act at all, but only to a separate and distinct offence found under Part A of the Schedule.


Obviously, the twin conditions laid down in section 45 would have no nexus whatsoever with a bail application which concerns itself with the offence of money laundering, for if section 45 is to apply, the Court does not apply its mind to whether the person prosecuted is guilty of the offence of money laundering, but instead applies its mind to whether such person is guilty of the scheduled or predicate offence. Bail would be denied on grounds germane to the scheduled or predicate offence, whereas the person prosecuted would ultimately be punished for a completely different offence, namely, money laundering.


This, again, is laying down of a condition which has no nexus with the offence of money laundering at all, and a person who may prove that that there are reasonable grounds for believing that he is not guilty of the offence of money laundering may yet be denied bail, because he is unable to prove that there are reasonable grounds for believing that he is not guilty of the scheduled or predicate offence. This again would lead to a manifestly arbitrary, discriminatory and unjust result and invalidate the section.