Twin conditions of PMLA Section 45 are reasonable to combat the menace of money-laundering: SC

New Delhi [India], July 27 : The Supreme Court on Wednesday observed that the provisions in the form of Section 45 of the 2002 Prevention of Money Laundering Act, as applicable post amendment of 2018, are reasonable and have direct nexus with the purposes and objects sought to be achieved by the 2002 Act for combating the menace of money-laundering having transnational consequences, which include impacting the financial systems and sovereignty and integrity of the countries.
"We hold that the provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act to combat the menace of money-laundering having transnational consequences including impacting the financial systems and sovereignty and integrity of the countries," the court said.
The court said that the provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, does not suffer from the vice of arbitrariness or unreasonableness.
Section 45 of the Prevention of Money Laundering Act (PMLA) made offences to be cognizable and non-bailable and no person accused of an offence shall be released on bail or on his own bond unless the Public Prosecutor is given the opportunity to oppose the application for such release and where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that the accused is not likely to commit any offence while on bail.
The court also noted that money-laundering is one of the heinous crimes, that not only affects the social and economic fabric of the nation but also tends to promote other heinous offences, such as terrorism, offences related to the Narcotic Drugs and Psychotropic Substances (NDPS) Act, etc and it is a proven fact that the international criminal network which supports home-grown extremist groups also rely on the transfer of unaccounted money.
The bench noted that the provision post-2018 amendment is in the nature of no bail in relation to the offence of money-laundering unless the twin conditions are fulfilled and the twin conditions are that-- one, there are reasonable grounds for believing that the accused is not guilty of the offence of money-laundering and second, he is not likely to commit any offence while on the bail.
Considering the purposes and objects of the legislation in the form of the 2002 Act and the background in which it was enacted owing to the commitment given to the international bodies and their recommendations, it is plainly clear that it is special legislation to deal with the subject of money-laundering activities having the transnational impact on the financial systems including sovereignty and integrity of the countries, the top court observed.
"We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional," the court said.
After the decision of the top court in Nikesh Tarachand Shah vs Union of India, the Parliament amended Section 45 of the 2002 Act vide Act 13 of 2018, so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under the 2002 Act. This amendment came to be challenged before the courts.
The petitioners have argued that twin conditions under Section 45 are grossly disproportionate and illogical for the crimes provided under the PMLA and the equation of the bail provisions under the PMLA cannot be made to the NDPS Act or Unlawful Activities (Prevention) Act (UAPA).
However, appearing for the Union Government, Solicitor General (SG) Tushar Mehta and representing ED Additional Solicitor General SV Raju, assisted by senior panel lawyer Rajat Nair, justified the condition of Section 45 of PMLA.
Gauri Rasgotra, Partner and Head - Delhi, Cyril Amarchand Mangaldas opined that the judgement will strengthen the hands of the ED in pursuing cases relating to money laundering.
Sharing her perspective Gauri Rasgotra said, "A three-judge bench of the Supreme Court has passed a judgment upholding the constitutional validity of the PMLA. On the issue of bail, the court has completely given a go by to the earlier judgment of the Supreme Court, which had clearly declared the twin conditions for bail to be unconstitutional being violative of article 14 and article 21 of the constitution.".
She further added, "Therefore the threshold for bail as well as anticipatory bail would have to go through the twin tests as prescribed in the new amendment. This would mean that even for anticipatory bail, the public prosecutor has to be heard. The court has further held that at the prima facie stage the duty of the court is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. This will strengthen the hands of the ED in pursuing cases relating to money laundering."