Twin conditions for bail in S. 45(1) of PMLA which were declared unconstitutional by SC stand revived: HC

Case Details: Ajay Kumar v. Directorate of Enforcement - [2022] 140 taxmann.com 426 (HC- Bombay)

Judiciary and Counsel Details

• • V.M. Deshpande & Vinay Joshi, JJ.
  • S.V. Manohar, Sr. Counsel, D.V. Chavan & G.S. Gour, Advs. for the Applicant.
  • Anil Singh, ASGI, Aditya Thakkar, Ms. Mugdha Chandurkar & Ku. Divya Gontia, Advs. for the Respondent.

Facts of the Case

In the instant case, the applicant preferred an application in terms of section 439 of the Code of Criminal Procedure, 1972 read with section 65 of the Prevention of Money Laundering Act, 2002 (PMLA) for grant of bail in connection with the offence of money laundering in terms of section 3 of the Prevention of Money Laundering Act, 2002 punishable under section 4 of the said Act.

During the course of the hearing of bail application, the applicant-accused canvassed that rigor of complying with the dual conditions incorporated in section 45(1)(ii) of the PML Act would not apply in view of the decision of the Supreme Court in the case of Nikesh Tarachand Shah v. Union of India. It was the contention that the Supreme Court has declared section 45(1) of the PML Act unconstitutional to the extent of twin conditions incorporated therein for grant of bail.

The said submission appeared to have been countered by the prosecution stating that due to the subsequent amendment introduced vide Act No. 13 of 2018, the twin conditions have been revived and therefore the statutory mandate would apply while considering the bail application.

The Enforcement Directorate (ED) in a bail application, reiterated that due to subsequent amendment, twin conditions would revive. Her submission appears to be that the subsequent amendment introduced by the Legislation in section 45(1) has cured the defects pointed out by the Constitutional Court in the case of Nikesh Tarachand Shah v. Union of India. Since the very foundation which was the basis for declaring twin conditions incorporated in section 45(1) unconstitutional has been removed, the twin conditions would squarely apply.

The reluctance of Single Judge for concurring with an earlier view expressed by co-ordinate Benches persuaded him to make reference to the Larger Bench for an authoritative pronouncement. In the wake of such position, the Single Judge vide its order dated 3-12-2021 framed the following question to be answered by the Larger Bench:

‘Whether the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh Tarachand Shah v. Union of India stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018 ?

High Court Held

The High Court held that the twin conditions for bail in section 45(1) which were declared unconstitutional by the judgment of Apex Court in Nikesh Tarachand Shah v. UOI [2017] 87 taxmann.com 257/[2018] 145 SCL 96 stand revived in view of legislative intervention in Prevention of Money Laundering Act, 2002 vide Amendment Act 13 of 2018.

List of Cases Reviewed

• • Shamrao V. Parulekar v. District Magistrate 1952 SCR 683 (para 46) followed.

List of Cases Referred to

• • Nikesh Tarachand Shah v. Union of India [2017] 87 taxmann.com 257/[2018] 145 SCL 96 (SC) (para 1)
  • Sameer M. Bhujbal v. Asstt. Director, Directorate of Enforcement [B.A. No. 286 of 2018, dated 1-2-2019] (para 3)
  • Union of India v. Yogesh Narayanrao Deshmukh 2021 SCC Online Bom. 2905 (para 3)
  • Dr. Shivinder Mohan Singh v. Directorate of Enforcement [2020] 118 taxmann.com 1/161 SCL 18 (Delhi) (para 3)
  • Upendra Rai v. Directorate of Enforcement [2020] 116 taxmann.com 471 (Delhi) (para 3)
  • Dr. Vinod Bhandari v. Asstt. Director 2018 SCC Online MP 1559 (para 3)
  • Ahilya Devi v. State of Bihar [Crl. Misc. Appl. No. 41413 of 2019, dated 28-5-2019] (para 3)
  • Bimal Kumar Jain v. Director of Enforcement 2021 SCC Online Delhi 3847 (para 3)
  • Mohammad Arif v. Directorate of Enforcement 2020 SCC Online Ori 544 (para 3)
  • P. Chidambaram v. Directorate of Enforcement [2020] 113 taxmann.com 403/157 SCL 649 (SC) (para 3)
  • Deepak Virendra Kochar v. Directorate of Enforcement [Crl. B.A. No. 1322 of 2020, dated 25-3-2021] (para 13)
  • Okram Ibobi Singh v. Directorate of Enforcement 2020 SCC Online Mani 365 (para 15)
  • Sai Chandrashekar v. Directorate of Enforcement [2021] 127 taxmann.com 272/165 SCL 564 (Delhi) (para 15)
  • Amarendra Dhari Singh v. Directorate of Enforcement [2021] 129 taxmann.com 162 (Delhi) (para 15)
  • Prakash Gurubaxani v. Directorate of Enforcement 2021 SCC Online Punj. & Har. 1567 (para 15)
  • Pankaj Grover v. Directorate of Enforcement 2021 SCC Online All. 566 (para 15)
  • Asstt. Directorate of Enforcement Directorate v. Dr. V.C. Mohan [Criminal Appeal No. 21 of 2022, dated 4-1-2022] (para 25)
  • Gautam Kundu v. Manoj Kumar, Asstt. Director [2015] 64 taxmann.com 291/[2016] 133 SCL 341 (SC) (para 26)
  • Rohit Tandon v. Enforcement Directorate [2017] 87 taxmann.com 260/[2018] 145 SCL 1 (SC) (para 26)
  • Y.S. Jagan Mohan Reddy v. CBI [2013] 7 SCC 439 (para 27)
  • Anil Vasantrao Deshmukh v. Directorate of Enforcement 2021 SCC Online Bom. 3641 (para 27)
  • B.K. Pavitra v. Union of India [2019] 16 SCC 129 (para 29)
  • State of Karnataka v. Karnataka Pawn Brokers Association [2018] 91 taxmann.com 228/255 Taxman 12 (SC) (para 29)
  • Bakhtawar Trust v. M.D. Narayan [2003] 5 SCC 298 (para 30)
  • Goa Foundation v. State of Goa [2016] 6 SCC 602 (para 31)
  • Nagaland Senior Government Employees Welfare Association [2010] 7 SCC 643 (para 38)
  • M.L. Kamra v. Chairman-Cum.-Managing Director, New India Assurance Co. Ltd. AIR 1992 SC 1072 (para 38)
  • Union of India v. E.I.D. Parry India Ltd. [2000] 2 SCC 223 (para 40)
  • A.C. Estates v. Serajuddin & Co. [1973] 2 SCC 324 (para 41)
  • Shikshan Prasarak Mandal v. Laxmikant Balkrishna Joshi 2004 (1) Mh. L.J. 619 (para 42)
  • New Delhi Municipal Committee v. State of Punjab AIR 1997 SC 2847 (para 43)
  • Shamrao V. Parulekar v. District Magistrate 1952 SCR 683 (para 46).