'Jurisprudence of arrest and bail under PMLA should be revisited': Justice Madan Lokur

He says suspicion about money-laundering cannot take the place of evidence

PTI03_28_2024_000113B Low point: Delhi Chief Minister Arvind Kejriwal at the Rouse Avenue court in Delhi | PTI
Justice Madan Lokur Justice Madan Lokur

Bail, not jail’ is not a slogan, but the manifestation of a right to personal liberty given to an arrested person, flowing out of Article 21 of the Constitution of India. The basis of this is the internationally accepted principle that a person is presumed to be innocent until proven guilty. Unfortunately, certain crimes have led to the introduction of a reverse onus on an accused person with the result that there is no presumption of innocence. Examples of crimes providing for a reverse onus include economic offences, possession of commercial quantities of drugs and terrorist offences.

Historically, economic crimes have always held a special place in India. Conservation of foreign exchange and smuggling activities led to a law authorising the executive to preventively detain a person violating the provisions of the law. The law is draconian and the Supreme Court has delivered several judgments holding the executive to account and ensuring that the procedures for detention are rigorously followed. Wherever the executive fails to adhere to the strict letter of the law and judgments of the courts, the order of preventive detention is quashed. A similar rigorous interpretation is given to the provisions of the Narcotic Drugs and Psychotropic Substances Act, which is also draconian. The message sent out by the courts is that personal liberty is not to be trifled with and in matters of detention, procedural law is as important as substantive law.

The General Assembly of the United Nations adopted a resolution on February 23, 1990, calling upon member states to adopt money-laundering legislation and programme. Acting on the resolution, the Prevention of Money Laundering Act (PMLA) was enacted by Parliament in 2002. As the title of the law suggests, it essentially relates to economic crimes and is a special law. There can be no doubt that crimes relating to money-laundering need to be dealt with sternly and expeditiously. In matters of arrest (section 19) and bail (section 45), therefore, the law has introduced some rather stringent provisions.

Section 19 of the Act empowers officers of the Enforcement Directorate to arrest a person who may be guilty of an offence under the Act. However, the section also provides that the arrest can be made only on the basis of material which gives the officer “reason to believe” that the person is guilty and that belief is recorded in writing. In addition, the officer is obliged to immediately forward a copy of the order along with the material to the adjudicating authority in a sealed envelope. Unfortunately, it appears that the courts have not examined whether this important procedural requirement has been rigorously followed by the arresting officer. If not followed, judgments of the Supreme Court would enable the appropriate court to quash the order of arrest. In addition, the reasons are justiciable (as in cases under the Income Tax Act) and must be objective and not subjective. This, too, is not being considered.

For the grant of bail (section 45), the law introduced the concept of reverse onus (on the accused person) and also required the accused to satisfy some conditions before he could be granted bail by an appropriate court. These conditions were not in keeping with the spirit and intent of the law, and the Supreme Court found them manifestly arbitrary in Nikesh Tarachand Shah vs Union of India (2017). The law has since been amended.

Section 45 of the Act (as amended) came up for consideration before the Supreme Court in Vijay Madanlal Choudhary vs Union of India (2022). On this occasion, the Supreme Court held that the law, as amended, is “reasonable and has a direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness”. This judgment of the Supreme Court is pending review.

The law as it now stands is that reverse onus continues and the conditions earlier objected to by the Supreme Court continue, though with some appropriate modifications. This law is now used to keep persons accused of money-laundering in prison and making it extremely difficult, if not impossible, for them to get bail.

There are a few aspects of the law that continue to trouble. First and foremost is the procedure for arrest. Then, the concept of reverse onus that virtually requires an accused to prove his innocence rather than for the prosecution to prove his guilt. Third, enormous delays by the ED in completing its investigation. It is for these reasons that some persons are in judicial custody for several months and in a couple of cases for more than a year. The view of the ED is that it is not easy to trace the money trail in the crime of money-laundering. While this may be correct, should a person accused of money-laundering remain in prison for an indefinite period without strong evidence implicating him of the crime? Suspicion that the crime of money-laundering has been committed, however strong, cannot take the place of evidence. To deprive a person of his liberty for an indefinite period, under these circumstances, is a violation of the human right of an accused guaranteed by Article 21 of the Constitution.

In short, the jurisprudence of arrest and bail under the PMLA deserves to be revisited, and quickly.

Lokur is a former Supreme Court judge.