New Delhi: In the two years since the Supreme Court’s verdict in the Vijay Madanlal Choudhary case, which had upheld provisions of the Prevention of Money Laundering Act (PMLA), 2002 and the wide powers of the Enforcement Directorate (ED), the Supreme Court seems to have delivered multiple verdicts slightly tilting the jurisprudence in PMLA cases towards ensuring liberty of the accused.
Back in 2022, a three-judge bench of the apex court had rejected 241 petitions challenging the constitutional validity of certain provisions of the Act.
The judgment — viewed as a fillip for the ED — had upheld stringent bail conditions under the law, the wide powers of the agency on search and seizure, admissibility of confession statement before the ED, reverse burden on the accused to prove innocence, and non-supply of Enforcement Case Information Report (the FIR equivalent for ED) lodged before prosecution.
The petitioners in the case had argued that the law provided arbitrary powers to the ED, violating fundamental rights, like the right to liberty and right against self-incrimination. The verdict, which was authored by Justice A.M. Khanwilkar two days before he retired, has remained contentious ever since, because it was viewed as affirming the wide powers granted to the ED.
A batch of petitions seeking a review of the Vijay Madanlal judgment is set to come up before the Supreme Court on 28 August. The case will be heard by a three-judge special bench, comprising Justices Surya Kant, C.T. Ravikumar and Ujjal Bhuyan. The lead review petition in the case has been filed by Congress MP Karti Chidambaram.
Back in August 2022, a three-judge bench had limited the review to two questions — should the ED provide the accused with the ECIR against them, and is the reversal of the presumption of innocence constitutionally valid.
A separate bench of the Supreme Court is also hearing petitions challenging the validity of sections 50 and 63 of the PMLA, which pertain to the Enforcement Directorate’s power to summon witnesses, extract confession and press for punishment for giving false information.
However, since 2022, the Supreme Court in several judgments, seems to have watered down the terse ruling and has tried to find a way around the 2022 verdict — from reminding trial courts and high courts of the principle that bail is the rule and jail the exception, to emphasising the need for ensuring the constitutional rights of the accused.
On liberty & delay
Section 45 of PMLA says that bail can be granted to an accused in a money laundering case only if two conditions are satisfied — there should be prima facie satisfaction that the accused has not committed the offence and that he is not likely to commit any offence while on bail. This makes the grant of bail under PMLA extremely difficult.
The Vijay Madanlal verdict had upheld these twin bail conditions. Those charged under PMLA often end up spending a long time in jail due to the stringency of the conditions.
However, back in March this year, the Supreme Court orally deprecated the ED, saying that keeping an accused in custody without trial is akin to detention, which hampers liberty. According to news reports, the court took serious objection to the central agency’s practice of filing supplementary chargesheets in money laundering cases to defeat the accused’s right of getting default bail.
The court’s remarks came during the hearing of the default bail plea of Prem Prakash, an alleged associate of Jharkhand Chief Minister Hemant Soren.
The court’s order passed on 20 March had then noted, “In case we are not able to take up the special leave petition for hearing on the said date, we will examine whether the petitioner — Prem Prakash should be granted interim bail as he has been in custody for over eighteen months.”
The matter remains pending and is set to come up again on 30 September this year.
‘Punishment without trial’
In its verdict granting bail to former Delhi deputy chief minister Manish Sisodia last week, the apex court’s insistence on the principle of bail being the rule and jail being the exception stood out.
The bench, comprising Justices B.R. Gavai and K.V. Viswanathan, emphasised speedy trial as a fundamental right under Article 21 of the Constitution, and opined that “on account of a long period of incarceration running for around 17 months and the trial even not having been commenced, the appellant has been deprived of his right to speedy trial”.
The court reiterated that the right to bail in cases of delay, coupled with incarceration for a long period, should be read into Section 439 (bail) of the Code of Criminal Procedure and Section 45 of the PMLA.
The court said that in its experience, it appears that trial courts and the high courts attempt to play safe in matters of grant of bail.
“The principle that bail is a rule and refusal is an exception is, at times, followed in breach,” it observed, noting that even in “straight forward open and shut cases”, the Supreme Court is flooded with a huge number of bail petitions, adding to the pendency.
The apex court was firm in its belief that trial courts and high courts should recognise the principle that bail is the rule and jail the exception.
Referring to Sisodia’s case, the court then noted that 493 witnesses have been named in the ED as well as the CBI matter, and that the case involves thousands of pages of documents and over a lakh of pages of digitised documents. It, therefore, noted that there was “not even the remotest possibility of the trial being concluded in the near future”.
“In our view, keeping the appellant behind the bars for an unlimited period of time in the hope of speedy completion of trial would deprive his fundamental right to liberty under Article 21 of the Constitution,” the court then asserted.
It observed that prolonged incarceration before being pronounced guilty of an offence “should not be permitted to become punishment without trial”.
‘Disclosing’ the grounds of arrest
Section 19 of PMLA says that after arrest, as soon as may be, the person should be informed about the grounds for such arrest. This is in compliance with Article 22 of the Constitution, which says that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest.
In the Vijay Madanlal verdict, the Supreme Court had upheld the validity of Section 19 of the law, holding that the provision has “stringent safeguards” and that it does not “suffer from the vice of arbitrariness”. It had also ruled that the supply of a copy of the ECIR in every case to the person concerned is not mandatory, and that it is enough if ED at the time of arrest, “discloses the grounds of such arrest”.
The 2022 verdict did not expressly speak about the manner in which the grounds of arrest are to be conveyed and so, the ambiguity in this manner was noticed in several cases. However, the Supreme Court has since brought in clarity on this mode of communication.
In October 2023, the Supreme Court granted bail to realty group M3M’s directors, Basant and Pankaj Bansal, in a money laundering case.
In doing so, the court brought the much-needed clarity in Section 19 by observing that “to give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception.”
However, another Supreme Court bench has since ruled that this judgment only applies to arrests made after the Pankaj Bansal verdict.
‘Constitutional safeguard’
In the Pankaj Bansal case, the court even noted that the ED had not been following a consistent and uniform practice on the grounds of arrest, because written copies of grounds of arrest were being furnished to arrested people in certain parts of the country, but not in the others, where the grounds of arrest were either read out to the arrested people or allowed to be read by them.
In the Bansals’ case, the court noted that ED’s investigating officer merely read out the grounds of arrest for the duo and left it at that — a fact that was also disputed by the Bansals. The court found this form of communication to be inadequate to fulfil the mandate of Article 22 of the Constitution and Section 19 of the Act. It, therefore, held that their arrest was not in accordance with the law.
The court’s interpretation then helped NewsClick’s editor-in-chief, Prabir Purkayastha, in May this year, when the Supreme Court declared his arrest illegal, and directed his release from custody.
While Purkayastha has been accused under various provisions of the Unlawful Activities (Prevention) Act, 1967, the court applied the Pankaj Bansal case judgment to the UAPA case as well. The court noted that the provision regarding the communication of the grounds of arrest to a person arrested contained in Section 43B of the UAPA is the same as that in Section 19 of the PMLA.
“As a matter of fact, both the provisions find their source in the constitutional safeguard provided under Article 22(1) of the Constitution of India,” the court asserted.
‘ED becomes powerless’
In another verdict in March 2024, the Supreme Court once again clarified the extent of ED’s powers of arrest and applicability of the stringent twin conditions of bail under Section 45 of the PMLA. The court ruled that after the trial court takes cognisance of the PMLA complaint, the ED loses its authority to arrest the accused under Section 19.
“After cognisance of the complaint under 44(1)(b) of the PMLA is taken by the Court, the ED and other authorities named in Section 19 are powerless to arrest an accused named in the complaint,” it observed.
The bench was further informed by the lawyers that some special courts under PMLA take the accused into custody after they appear in court pursuant to the summons issued on the complaint. The accused are then compelled to apply for bail under Section 45 of PMLA. The court, however, opined that such a practice is “completely illegal”.
Asserting that such a practice may violate the right to liberty under Article 21 of the Constitution, the court observed, “We cannot countenance a situation where, before the filing of the complaint, the accused is not arrested; after the filing of the complaint, after he appears in compliance with the summons, he is taken into custody and forced to apply for bail.”
“[I]f the accused appears before the Special Court pursuant to the summons, he shall not be treated as if he is in custody. Therefore, it is not necessary for him to apply for bail,” the court further explained. It said that the ED would have to separately apply for the custody of a person once he appears in court, and show specific grounds that necessitated custody.
(Edited by Mannat Chugh)
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It needs to go much further. 40 convictions out of 5,000 cases over a period of ten years is an instructive statistic.