Can strict bail provisions be used as a tool for prolonged jail time?

The Prevention of Money Laundering Act (“PMLA”), 2002 lays down stringent conditions for bail for offences under this Act. Recently, the Supreme Court warned the Enforcement Directorate (“ED”), the government agency that investigates crimes of money laundering, against the misuse of the strict bail provisions of the PMLA. The court said that even in PMLA cases, bail is the rule and jail is the exception. The ED cannot use the difficult threshold to obtain bail as a tool to keep an accused in jail without trial for long. 

In this Weekly, we’ll discuss what are the offences under the PMLA and why it is difficult to get bail.

What crimes does the PMLA punish?

The crime of money laundering involves actively acquiring, concealing or possessing, or helping in acquiring, concealing or possessing money or property obtained through criminal means or as payment for any criminal or unlawful activity. Money laundering also involves activities to make such money or property appear legitimate by re-introducing it into the economy through multiple transactions and investments. 

The PMLA lays down the punishments for the crime of money laundering and other related offences like tax evasion etc.

What are the punishments for offences under PMLA?

For offences under the Act, one can be punished with jail time with hard labour for not less than three years but extending to ten years and or a fine.

Section 19 of the Act empowers the Director, Deputy Director or any authorised officer to arrest someone if they have reasonable grounds to believe that the accused is involved in any form of money laundering.  According to section 45 of the Act, offences under PMLA are cognizable, i.e., the officer can arrest without a warrant and non-bailable,i.e., bail cannot be granted as a matter of right and can only be given by a court of law. 

As with most non-bailable offences, where the allegations are usually more serious in nature, it is difficult to obtain bail in offences under PMLA. However, in the 2020 case of P. Chidambaram v Directorate of Enforcement, the Supreme Court clarified that bail cannot be denied automatically even in cases of grave economic offences as in the case of PMLA crimes. 

What are the conditions for bail for offences under PMLA?

The PMLA imposes a very high threshold to obtain bail which makes it very difficult for the accused to get released from custody after arrest while the investigation continues. There are two tests that determine whether an accused can get bail in a PMLA case. 

Firstly, the court will examine whether the public prosecutor (the lawyer who represents the ED) has gotten adequate opportunity to oppose the bail application before the court or not. Second, the court must be satisfied that there is reasonable grounds to believe that the accused is not guilty of the alleged offence and will not commit any offence while out on bail. 

The PMLA further clarifies that these conditions are in addition to the limitations to the grant of bail already enlisted in existing criminal laws,i.e., the Criminal Code of Procedure or the Bharatiya Nagarik Suraksha Samhita as the case may be. 

Are there any exceptions to the bail conditions under PMLA?

There are certain relaxations given to these bail conditions under PMLA if the accused is a woman, a person suffering from any sickness, a minor (in this case, under the age of sixteen) or is accused of money laundering of any value under Rs 1 crore. For accused falling in these categories, a Special ED Court can direct them to be released on bail. 

In the Manish Sisodia v. Directorate of Enforcement (2024) case, the Supreme Court held that in cases where there is prolonged delay in the trial without any fault of the accused, the right to bail must be included within the scope of section 45. 

In the current case, the Supreme Court echoed its previous orders and stated that Courts can exercise their jurisdiction to grant bail even in PMLA cases if they conclude that there is no possibility of the trial ending within a reasonable period of time. This is essential to safeguard the right to personal liberty every citizen, including the accused, is entitled to under Article 21 of the Indian Constitution.