Bail under PMLA: Sec 45 Conditions & Exceptions

Every person is presumed to be innocent until proven guilty- is a fundamental principle of criminal jurisprudence. The concept of bail is rooted in this principle, giving meaningful effect to the right to life and personal liberty. In this article, an attempt is made to provide the reader that how far the special statute in terms of provision of bail dealing with the menace of money laundering is taking care of the cardinal principles of criminaljurisprudence.

When offence of Money Laundering constitutes

In India, the menace of money laundering is dealt by the Prevention of Money Laundering Act, 2002 (Hereinafter referred as PMLA,2002) enacted after considering the international treaties and recommendations of Financial Action Task force, a dedicated international body that leads global action to tackle money laundering, terrorist and proliferation financing.

In the context of securing bail in PMLA, 2002, it becomes necessary to know when the offence of money laundering is made against you. To understand this section 3 of the Act is the relevant provision that arises for consideration which reads as hereunder:

“3. Offence of money-laundering.—Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.

Explanation.—For the removal of doubts, it is hereby clarified that,—

i. a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:—

a) concealment; or

b) possession; or

c) acquisition; or

d) use; or

e) projecting as untainted property; or

f) claiming as untainted property,

in any manner whatsoever;

ii. The process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.”

In simpliciter, money laundering is an offence wherein the offender projects the money or property, derived from the offences enlisted in the schedule of the Act, as untainted money or property. The offence of money laundering is done in three stages namely placement, layering and integration.

· Placement- In this the funds are moved from direct association of crime.

· Layering- By creating complex transactions proceeds of crime are disguised in such a manner that no link is found with the source where it comes from.

· Integration- Providing the money to the criminal which appears to be come from legitimate sources.

The process or activity in any form- be it concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any of the process or activity connected with the proceeds of crime would constitute the offence of money laundering. The act is only concerned with the proceeds of crime obtained from offences provided in the schedule and nothing else.

Offence of money laundering is a continuing offence as it is an ongoing activity as long as illicit gains are possessed, projected as legitimate or reintroduced into economy. Therefore, the relevant date to consider the person as an accused is the date on which the accused engages in any of the activity connected with the proceeds of crime.

Bail under PMLA, 2002

Subsection 1 of Section 45 of the Act, states that when accused is entitled for bail under the Act. It provides the twin test which necessarily requires to be satisfied to seek bail. The relevant part of the provision is read as-

"45. Offences to be cognizable and non-bailable.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless—

i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:

Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm, or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees may be released on bail, if the Special Court so directs:"

In simple words, to seek bail under section 45 of the Act, 2002 a public prosecutor must be given an opportunity of being heard and accused must prove that there are reasonable grounds that he is not guilty of an offence. Additionally, he must also prove that he will not commit any offence if enlarged on bail. It is pertinent to mention that prosecution must first establish prima facie foundational facts to fall the reverse burden of proof on accused by virtue of section 24 of the Act.

The proviso to the bail gives discretionary power to grant bail to the court, as suggested by the use of the expression “may”,when the accused is the child below the age of sixteen years or woman or is sick or infirm or the amount involved in money laundering is less than 1 crore. In the case of Kalvakuntla Kavitha vs. Directorate of Prosecution, the Apex court held that the expression “Woman” in the proviso to section 45 did not apply only to vulnerable woman.

Bail is the rule, and jail is an exception

In the case of Prem Prakash vs. Union of India through the Directorate of Enforcement, 2024 the hon’ble Supreme court has held that PMLA, 2002 also has taken care of the fundamental principle of bail is the rule and jail is an exception. However, the Act only lays down that the bail can only be granted when twin conditions are satisfied.

Whether twin conditions are always required to be satisfied ?

The answer to the above question is in negative. There exist certain grounds founded on the premises of fundamental rights in violation of which accused is entitled to be enlarged on bail, though twin conditions incorporated in section 45 of the Act not satisfied.

Grounds to seek bail in Offences under PMLA, 2002

Besides the twin conditions, following are the grounds on which bail can be sought from the court-

1. Long incarceration and number of witnesses to be examined.

2. Delay coupled with long incarceration should be read into Section 45 of the Act.

3. Contradictory stand of the investigation agency. For instance- where at one hand they are ready to expedite trial and on other hand seeking time for filing supplementary chargesheet, provided accused is detention from long time.

4. No written grounds of arrest to the arrestee are supplied which affects his right of fair trial.

5. The accused’s presence is not secured before the Magistrate within twenty-four hours of the arrest.

In the case of Vijay Madanlal Choudhary & Ors. vs. Union of India, the Apex Court held that section 436A of Criminal Procedure Code is a beneficial provision. Therefore, it could be invoked by the accused arrested under PMLA, 2002.

To conclude, the list of grounds mentioned is not exhaustive rather inclusive in nature. The concept of bail arises from the fundamental right of liberty and right of fair trial enunciated expressly and impliedly under article 21 of the Constitution. It cannot be curtailed without following due process of law. Any curtailment of such right is to be read in the light of constitutional protection provided under clause 1 and clause 2 of article 22 of the Constitution. It is the duty of every court to uphold the fundamental rights guaranteed under article 21 and 22 of the Constitution.