The bench of Justices Abhay S Oka and Ujjal Bhuyan elaborated that in cases where the accused appears before the court following summons, the ED must apply to the court to obtain custody of the accused. The court will grant custody only after satisfying itself that custodial interrogation is necessary.
NEW DELHI: Today (16th May): The Supreme Court of India clarified that individuals accused in money laundering cases, who are not arrested by the Enforcement Directorate (ED) during the investigation but appear before the special court following summons issued under the Prevention of Money Laundering Act (PMLA), are not required to satisfy the stringent bail conditions under Section 45 PMLA.
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The Supreme Court clarified that if the accused appears before the special court by summons, it cannot be considered as being in custody. Therefore, such individuals need not fulfill the twin conditions for bail under the PMLA.
The bench of Justices Abhay S Oka and Ujjal Bhuyan elaborated that in cases where the accused appears before the court following summons, the ED must apply to the court to obtain custody of the accused. The court will grant custody only after satisfying itself that custodial interrogation is necessary.
The Supreme Court ruled,
“If the Enforcement Directorate (ED) seeks custody of the accused after they appear following summons, the ED can obtain custody by applying to the special court. The court will grant custody only if it provides reasons satisfying the necessity of custodial interrogation.”
Section 45 of the PMLA mandates that the court allows the Public Prosecutor to oppose the bail application of the accused. It further states that the accused can only be released if the court is convinced that there are reasonable grounds to believe in their innocence and that they are unlikely to commit any offenses while on bail. These conditions often pose challenges for accused individuals seeking bail in money laundering cases.
These stringent conditions pose challenges for accused individuals seeking bail in money laundering cases.
The Supreme Court clarified that if the accused appears before the special court due to summons issued by the court, it cannot be considered as being in custody. Therefore, such individuals are not required to fulfill the twin conditions for bail under the PMLA.
The judgment stated,
“Accused individuals who appear before the court pursuant to summons are not required to apply for bail, and therefore, the twin conditions of Section 45 of the PMLA are not applicable.”
The verdict came in response to a case questioning whether accused individuals in money laundering cases are subject to stringent bail conditions even when the special court takes cognizance of the offense.
The Supreme Court, during the proceedings, deliberated on whether accused individuals, not arrested during the investigation under PMLA, must still meet the strict bail conditions if they appear before the court after the trial court acknowledges the ED complaint and issues summons.
The legal debate arose from a Punjab and Haryana High Court order that denied pre-arrest bail to several accused individuals in a money laundering case linked to an alleged land scam involving revenue officials. The Supreme Court had granted interim protection to the accused individuals earlier this year.
The Supreme Court recalled its 2017 decision that struck down Section 45(1) of the PMLA, which imposed additional bail conditions for money laundering accused. This provision was later reinstated by the Center after making amendments to the PMLA.
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In January, the Supreme Court granted interim protection to the accused.
In November 2017, the Court invalidated Section 45(1) of the PMLA, which imposed additional conditions for bail in money laundering cases.
This provision was later reinstated by the Centre through amendments to the PMLA.
The 2017 ruling was set aside in July 2022 by a bench of Justices AM Khanwilkar, Dinesh Maheshwari, and CT Ravikumar in the case of Vijay Madanlal Choudhary v. Union of India. This decision received criticism, leading to several review applications being filed.
This ruling faced strong criticism, prompting several review applications.
Retired Supreme Court judge Justice Rohinton Fali Nariman termed the decision as unfortunate.
Former Chief Justice of India (CJI) UU Lalit also expressed similar views, emphasizing the principle of ‘innocent until proven guilty’ in Indian criminal jurisprudence.
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In August 2022, the Supreme Court issued a notice to the Central Government in a review plea filed by Congress leader Karti Chidambaram challenging the Vijay Madanlal ruling.
Senior Advocate Sidharth Luthra and his team represented the accused, while Additional Solicitor General SV Raju and his team appeared for the ED.
Case Title: Tarsem Lal v. Directorate of Enforcement
