PMLA cannot become a tool to detain people: Supreme Court
While granting bail to Senthil Balaji, the court sounded a clear warning about the abuse of PMLA provisions by the ED.
The Supreme Court on Thursday strongly disapproved of using the Prevention of Money Laundering Act (PMLA) “as a tool” to prolong the incarceration of an accused, ruling that constitutional courts will not allow indefinite pretrial detention under the anti-money laundering law.
While granting bail to former Tamil Nadu minister V Senthil Balaji, arrested in June 2023 on money-laundering charges arising out of cash-for-jobs scam case, the court sounded a clear warning about the abuse of PMLA provisions by the Enforcement Directorate (ED), delivering a scathing critique of how the law is being employed to keep individuals jailed without trial for an unreasonably long time.
The bench acknowledged that there was a prima facie case against Balaji, but the prolonged detention without a foreseeable end to the trial weighed heavily in favour of his release.
“The constitutional courts cannot allow provisions like Section 45(1)(ii) to become instruments in the hands of the ED (Enforcement Directorate) to continue incarceration for a long time when there is no possibility of the trial concluding within a reasonable time,” a bench of justices AS Oka and AG Masih declared. Under PMLA, Section 45 prescribes a high threshold requiring courts to conclude that the accused is not guilty of the offence and is not likely to commit the offence while on bail.
The court also cautioned that the stringent provisions of PMLA must not become instruments of arbitrary detention and expressed deep anguish over the prolonged detention of individuals in cases involving stringent penal laws.
“These stringent provisions regarding the grant of bail, such as Section 45(1)(iii) of the PMLA, cannot become a tool which can be used to incarcerate the accused without trial for an unreasonably long time,” held the bench, underscoring that stringent of PMLA provisions must not result in an indefinite loss of personal liberty. It asserted “bail is the rule, and jail is the exception” as a well-settled principle of India’s criminal jurisprudence.
The ruling comes at a time when two special benches of the Supreme Court are yet to hold an effective hearing on petitions challenging the validity of certain PMLA provisions, particularly those related to summons, arrest, search and seizure. One batch of these petitions has assailed the apex court’s 2022 judgment in the Vijay Madanlal Choudhary case, which upheld several controversial provisions of PMLA with far-reaching impact on the powers granted to ED under the law.
Thursday’s judgment, penned by justice Oka, reflected growing judicial concern that the statute could be weaponised in a way that violates fundamental rights under Article 21 of the Constitution, which guarantees the right to life and personal liberty. This critique followed recent judgments that underscored the importance of personal liberty, including bail as a constitutional right, even in cases involving severe statutory restrictions.
Various benches of the apex court have delivered powerful rulings highlighting the need for the prosecution to act fairly, even under laws like PMLA and UAPA, which impose significant restrictions on bail. Many of these judgments involved the granting of bail to persons, such as Delhi chief minister Arvind Kejriwal, former Delhi deputy chief minister Manish Sisodia, Aam Aadmi party lawmaker Sanjay Singh and BRS leader K Kavitha, who were arraigned as accused by ED in the Delhi excise policy case.
Section 45 of PMLA stipulates that the public prosecutor must be given an opportunity to oppose the bail application of the accused. It also requires the court to be convinced that there are reasonable grounds to believe the accused is not guilty and is not likely to commit any offence while on bail. These conditions generally make it challenging for an accused in a money laundering case to secure bail. Laws such as UAPA and NDPS also have similar provisions that contemplate the reverse burden of proof, which requires the accused to prove their innocence, even during bail proceedings -- a stark departure from the usual legal presumption of innocence until proven guilty.
Drawing on the Supreme Court’s 2021 judgment in the KA Najeeb case that recognised inordinate delays in trials as a ground of bail in UAPA cases, the bench reiterated that stringent bail provisions do not preclude constitutional courts from intervening in cases where trials are excessively delayed.
“The rigours of such provisions will melt down where there is no likelihood of trial being completed in a reasonable time, and the period of incarceration already undergone has exceeded a substantial part of the prescribed sentence,” noted the court.
A central theme of the court’s ruling was the intersection between delayed trials and the harsh bail provisions under PMLA, Unlawful Activities (Prevention) Act , or UAPA, and Narcotic Drugs and Psychotropic Substances Act (NDPS). The bench held that the stringent conditions for bail under these special laws “cannot go together” with inordinate delays in the trial process.
“Expeditious disposal of trials for the crimes under these statutes is contemplated. Inordinate delay in the conclusion of the trial and the higher threshold for the grant of bail cannot go together,” asserted the bench, ruling that if trials are likely to be prolonged indefinitely, the courts have a constitutional duty to intervene.
“Considering the gravity of the offences in such statutes, expeditious disposal of trial for the crimes under these statutes is contemplated...The expeditious disposal of the trial is also warranted considering the higher threshold set for the grant of bail. Hence the requirement of expeditious disposal of cases must be read into these statutes,” declared the bench, expanding the remit of this ruling to UAPA and NDPS as well.
PMLA prescribes a minimum sentence of three years and a maximum of seven years for money laundering offences. When trials are likely to drag on beyond reasonable limits, the court said, the continued detention of the accused becomes untenable. “If the trial of the complaint under PMLA is likely to prolong beyond reasonable limits, the Constitutional Courts will have to consider exercising their powers to grant bail,” the judgment said.
If constitutional courts do not exercise their jurisdiction in such cases, it noted, the rights of the under-trials under Article 21 of the Constitution of India will be defeated.
The judgment stressed that even in statutes that override standard bail provisions, the overarching principles of justice must be preserved. “The constitutional courts can always exercise their jurisdiction under Article 32 or Article 226, as the case may be,” it explained, referring to the courts’ power to intervene in cases of fundamental rights violations.
Reflecting on cases where accused individuals have spent years in jail, only to be acquitted in the end, the court lamented the unjust loss of years of life due to prolonged incarceration and clean acquittals. “There are cases where clean acquittal is granted by the criminal courts to the accused after very long incarceration as an under-trial. In such cases of clean acquittal, crucial years in the life of the accused are lost,” it noted.
The bench went so far as to suggest that in such cases, individuals may have a claim for compensation for the violation of their rights under Article 21. “It may amount to violation of rights of the accused under Article 21 of the Constitution, which may give rise to a claim for compensation,” said the bench, adding constitutional courts will have to someday take a call on this “peculiar situation” that arises in the justice delivery system.
The powerful judgment by the court came while granting bail to former state minister and DMK leader Balaji, who was arrested by ED in June 2023 in a case alleging cash-for-jobs dating back to 2014 when he was transport minister under the AIADMK government. The alleged scam, which surfaced in 2011, involved the alleged exchange of money for job appointments in the state’s transport department. ED’s investigation into the laundering charges followed earlier criminal proceedings against Balaji under the Prevention of Corruption Act.
Balaji was represented in the case by senior advocates Mukul Rohatgi and Sidharth Luthra. Ordering his release on bail, the court highlighted that the minimum sentence for money laundering under Section 4 of the PMLA is three years, which can be extended to seven years. Given that Balaji has already been in jail for more than a year, the court was mindful of the extended period of his pre-trial detention.
It further noted that the case involves over 2,000 accused and more than 600 witnesses. Due to this large number, the trial process is expected to be long and drawn out, with even the framing of charges likely to take several months, noted the bench, adding the trial proceedings were expected to take at least three years. Simultaneously, it pointed out that the trial under PMLA cannot be finalised until the trial of the scheduled offences concludes. This created a situation where even if the money laundering trial proceeded, it could not be fully resolved unless Balaji was found guilty of the scheduled offences -- in this case, the cash-for-jobs scam, in the first place.
To address concerns raised by ED regarding possible tampering with witnesses or evidence, the court imposed strict conditions on bail, including regular appearance by Balaji before the deputy director of ED in Chennai every Monday and Friday; appearance before the investigating officer of the scheduled offences; restraint against contacting any prosecution witnesses or victims related to the scheduled offences; full cooperation with the trial and a refrain from asking for adjournments.
