The Delhi High Court granted bail to two persons accused of money laundering noting that Section 45 of the PMLA cannot be permitted to be used as a tool of incarceration and where conflict exists between such stringent provisions and Article 21, the former would have to give way.

The Court was hearing applications by two ex-promoters of Bhushan Steel Ltd. seeking regular bail. These ex-promoters are facing charges under certain provisions of the Companies Act, 2013 and the Indian Penal Code, 1860 that are scheduled offences under the Prevention of Money Laundering Act, 2002 (PMLA).

Since the offence pertains to money laundering the Court had to see whether the twin conditions stipulated in Section 45 of the PMLA are met, apart from the usual considerations. Citing the Supreme Court’s Judgment in Vijay Madanlal Choudhary v. Union of India, the Court noted that the twin conditions though restrict the right of accused to be released on bail, they do not impose absolute restraint and the discretion vests in the Court.

The Single Judge Bench of Justice Manoj Kumar Ohri said, “When there are multiple accused persons, lacs of pages of evidence to assess, scores of witnesses to be examined, the trial is not expected to end anytime in the near future. Importantly, the delay being not attributable to (the) accused, keeping the accused in custody by using Section 45 PMLA as a tool for incarceration is not permissible. Flow of liberty cannot be dammed by Section 45 without taking all other germane considerations into account. It is the duty of Constitutional Courts to champion the constitutional cause of Liberty and uphold the majesty of Article 21.”

Senior Advocate Sanjay Jain appeared for one of the petitioners and Senior Advocate Rebecca M. John appeared for the other. Advocate Manish Jain appeared for the Enforcement Directorate.

“The right of liberty and speedy trial guaranteed under Article 21 is a sacrosanct right which needs to be protected and duly enforced even in cases where stringent provisions have been made applicable by way of special legislation. The stringent provisions would have to be interpreted with due regard to Article 21 and in case of a conflict, the stringent provisions, such as section 45 of the PMLA in the instant case, would have to give way,” the Court said. It further said where it is evident that the trial is not likely to conclude in a reasonable time, Section 45 “cannot be allowed to become a shackle which leads to unreasonably long detention of the accused persons.”

The twin conditions in Section 45 are that the public prosecutor must be given an opportunity to oppose the application and the Court should have reasonable grounds for believing that he is not guilty of such an offence and that he is not likely to commit any offence while on bail.

In former Delhi minister Manish Sisodia’s case, the Supreme Court had granted him bail noting, “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."

In Prem Prakash v. Union of India (2024), the Supreme Court had cited past Judgments to say, “where the accused has already been in custody for a considerable number of months and there being no likelihood of conclusion of trial within a short span, the rigours of Section 45 of PMLA can be suitably relaxed to afford conditional liberty.”

In V. Senthil Balaji v. The Deputy Director, Directorate of Enforcement (2024), the Supreme Court had held, "Inordinate delay in the conclusion of the trial and the higher threshold for the grant of bail cannot go together. It is a well settled principle of our criminal jurisprudence that “bail is the rule, and jail is the exception.” 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."

The Court also noted that the Supreme Court has granted bail in cases pertaining to other special legislations “where provisions akin to Section 45 PMLA exist”. In this regard, it cited Javed Gulam Nabi Shaikh v. State of Maharashtra (2024), wherein Supreme Court granted bail to a person accused under Unlawful Activities Prevention Act, 1967.

In Sk. Javed Iqbal v. State of Uttar Pradesh (2024), the Supreme Court had said, "A constitutional court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-undertrial under Article 21 of the Constitution of India has been infringed. In that event, such statutory restrictions would not come in the way.”

With regard to the present case, the Court noted that investigation was initiated in the year 2019 and the prosecution has named 156 accused persons and cited 82 witnesses and that 2.5 lac pages of documents would need to be analysed. It also noted that the ED had asked for permission to conduct further permission.

It further noted that the two applicants have been in custody for more than nine months and the trial in the predicate as well as the present complaint is yet to commence and would take some time to conclude. It is also the case that the main accused and other similarly placed co-accused persons are enlarged on bail. The Court said that the present applicants are not a flight risk and have joined the investigation on multiple occasions, and that the ED has not alleged any attempts to tamper with evidence or influence witnesses. While granting bail, the Court clarified that it has not expressed any opinion on the merits of the case.

Cause Title: Pankaj Kumar Tiwari v. Enforcement Directorate [Neutral Citation 2024:DHC:8280]

Appearance:

Petitioner 1: Senior Advocate Sanjay Jain and Advocates Abhijit Mittal, Anukalp Jain, Palak Jain, Harshita Sukhija and Nishank Tripathi

Petitioner 2: Senior Advocate Rebecca M. John and Advocates Tapan Sangal, Dharmendra Singh and Pravir Singh

Respondent: Special Counsel For Ed Manish Jain And Advocate Sougata Ganguly, Snehal Sharda and Gulnaz Khan

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Tushar Kohli