Bombay High Court
Ajay Kumar S/O Chandraprakash ... vs Directorate Of Enforcement Thr. ... on 28 January, 2022
Bench: V.M. Deshpande, V. G. Joshi
(1) criaba1149.21
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT NAGPUR
CRIMINAL APPLICATION (BA) NO.1149 OF 2021
Ajay Kumar s/o. Chandraprakash Baheti .. Applicant
Aged about 42 years, Occ. Business,
R/o. Vishnu Complex, Nanded City,
Dist. Nanded.
VERSUS
Directorate of Enforcement .. Respondent
Through the Assistant Director,
Sub-Zonal Officer,
Nagpur.
Mr.S.V. Manohar, Sr. Counsel with Mr.D.V. Chavan and
Mr.G.S.Gour, Advocate for the applicant.
Mr.Anil Singh, ASGI with Mr. Aditya Thakkar, Ms. Mugdha
Chandurkar and Ku. Divya Gontia, Advocates for the
respondent.
CORAM : V.M. DESHPANDE &
VINAY JOSHI, JJ.
RESERVED ON : 06.01.2022
PRONOUNCED ON : 28.01.2022
J U D G M E N T : [PER : VINAY JOSHI, J.] :-
01. Reference made by learned Single Judge dated
03.12.2021 has occasioned us to deliberate upon the
conflicting views expressed by the learned Single Judges
on the issue involved. The center of focus revolves
around the effect of post-amended section 45 of the
(2) criaba1149.21
Prevention of Money-Laundering Act, 2002 (PML Act) in
terms of amendment introduced w.e.f. 19.04.2018, after
decision of the Supreme Court in the case of Nikesh
Tarachand Shah Vs. Union of India (2018) 11 SCC 1. The
applicant (accused) has preferred an application in terms
of section 439 of the Code of Criminal Procedure, 1972
(code) read with section 65 of the PML Act, for grant of
bail in ECIR/NGSZO/13/2021 registered at the Director of
Enforcement (ED), Sub-Zonal Office, Nagpur, in connection
with the offence of money laundering in terms of section
3 of the PML Act punishable under section 4 of the said
Act.
BACKGROUND FOR REFERENCE :-
02. During the course of hearing of bail
application, learned Counsel appearing for applicant-
accused canvassed that rigor of complying duel conditions
incorporated in section 45(1)(ii) of the PML Act would
not apply in view of the decision of the Supreme Court in
(3) criaba1149.21
the case of Nikesh Shah (supra). It is 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 appears to have been countered by the
prosecution stating that due to 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.
03. To substantiate the contention about non-
applicability of twin conditions post decision of the
Supreme Court in the case of Nikesh Shah (Supra),
reliance was placed on two decisions of this Court in the
case of Sameer M. Bhujbal Vs. Assistant Director,
Directorate of Enforcement, (B.A. No.286/2018 - Bombay
High Court) and the case of Union of India Vs. Yogesh
Narayanrao Deshmukh (2021) SCC Online Bom 2905. Besides
that some decisions of other High Courts in cases of Dr.
Shivinder Mohan Singh Vs. Directorate of Enforcement
(4) criaba1149.21
(2020) SCC Online Del 766 (Delhi High Court), Upendra Rai
Vs. Directorate of Enforcement (2019) SCC Online Del 9086
(Delhi High Court), Dr.Vinod Bhandari Vs. Assistant
Director (2018) SCC Online MP 1559 (Madhya Pradesh High
Court) and Most. Ahilya Devi Vs. State of Bihar & Ors.
(Cri.Misc. Appl. No.41413/2019) (Patna High Court) have
been pressed into service. The learned Counsel Mrs.
Mugdha Chandurkar appearing for the Enforcement
Directorate (ED) in bail application, expressed her
reservation about the view expressed in above decisions
by reiterating that due to subsequent amendment, twin
conditions would revive. In that regard she relied on the
decision of Delhi High Court in cases of Bimal Kumar Jain
Vs. Director of Enforcement, 2021 SCC Online Del 3847.
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 Shah (supra). Since the very
foundation which was the basis for declaring twin
conditions incorporated in section 45(1) of the Act
(5) criaba1149.21
unconstitutional has been removed, the twin conditions
would squarely apply. The Reference Court also took note
of the decision of Orissa High Court in case of Mohammad
Arif Vs. Directorate of Enforcement, 2020 SCC OnLine Ori
544 and the decision of the Supreme Court in the case of
P.Chidambaram Vs. Directorate of Enforcement (2020) 13
SCC 791 while making reference.
04. On confronting with rival submissions, the
learned Single Judge of this Court expressed that the
very foundation of the declaration of the
unconstitutionality was that the stringent twin
conditions operated indiscriminately before amendment.
According to the learned referal Judge, the basis and
foundation of the declaration of unconstitutionality
stood removed in view of the Legislative intervention and
therefore expressed his inability to concur with the view
expressed by the learned Single Judges of this Court in
the cases of Sameer Bhujbal (supra) and Yogesh Deshmukh
(supra).
(6) criaba1149.21
05. Reluctance of learned Single Judge for
concurring with earlier view expressed by coordinate
Benches persuaded him to make reference to the Larger
Bench for an authoritative pronouncement. In the wake of
such position, the learned Single Judge vide its order
dated 03.12.2021 framed the following question to be
answered by the Larger Bench:-
QUESTION REFERRED :-
"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 T.Shah Vs. Union of India (2018)
11 SCC 1, stand revived in view of the
Legislative intervention vide Amendment Act 13
of 2018?"
. In turn, we are called upon to answer the above
referred question.
06. We have exhaustively heard learned Senior
Counsel Mr.Sunil Manohar for the applicant-accused and
learned Additional Solicitor General of India (ASGI) Mr.
(7) criaba1149.21
Anil Singh on behalf of the ED. Both of them made
elaborate submissions on the issue involved in context
with the relevant provisions in different enactments
like, The Terrorist and Disruptive Activities
(Prevention) Act, 1987, Narcotic Drugs and Psychotropic
Substances Act, 1985, The Maharashtra Control of
Organised Crime Act, 1999, The Scheduled Castes and
Scheduled Tribes (Prevention of Atrocities) Act, 1989
etc. Besides that both of them placed reliance on
various reported judgments, which we prefer to deal
contextually. We may hasten to add that submissions were
made as if we are dealing with the issue about
constitutional validity of the amended provision, which
challenge, in fact, is pending before the Supreme Court.
RIVAL CONTENTIONS AND ITS ANALYSIS :-
07. Coming to the submissions of learned Senior
Counsel Mr.Sunil Manohar, his main thrust was on the
point that in view of the declaration made by the Supreme
(8) criaba1149.21
Court in the case of Nikesh Shah (supra), the entire
section 45 has been struck down. The Constitutional
Court has struck down the twin conditions on many
grounds. The Legislative amendment of the year 2018 has
not cured the entire defects pointed out by the Supreme
Court and therefore the twin conditions would not revive.
He would submit that the Parliament cannot nullify the
effect of the judgment of the Supreme Court by
introducing the said amendment. Unless all defects
pointed by the Supreme Court are cured by comprehensive
legislation, the twin conditions would not revive. In
other words, the effect of striking down section 45 of
the PML Act would remain as it stands. In his elaborate
submission, learned Senior Counsel Mr.Sunil Manohar took
us through the judgment of the Supreme Court in Nikesh
Shah's case with special reference to some of the
paragraphs.
08. The learned ASGI Mr. Anil Singh submits that
though in Nikesh Shah's case, section 45(1) of the PML
(9) criaba1149.21
Act, as it then stood, had been declared
unconstitutional, but the defect pointed out by the
Supreme Court which formed the basis to declare section
45(1) to be unconstitutional has been cured by the
Legislature through its Amendment Act No.13 of 2018 which
came into force from 19.04.2018. He would submit that
the offending expression "punishable for a term of an
imprisonment of more than three years under Part-A of the
Schedule" as used under section 45(1) has been
substituted with the words "under this Act" and as such
the foundation for declaration that the provision is
violative of Articles 14 and 21 of the Constitution, has
been stood removed and corrected.
09. The learned ASGI argued that by substitution of
words "under this Act", in section 45 of the Act, now the
twin conditions for bail with respect to an offence of
money laundering which is a serious economic offence
would revive. He contended that the twin conditions
incorporated in section 45(1) of the PML Act, have been
( 10 ) criaba1149.21
declared ultravires in case of Nikesh Shah (supra) not
because of any inherent defect in these two conditions in
itself, but because of its dependency, its applicability
on predicated offence i.e. offences included in Part-A of
the Schedule, as those scheduled offences are not
offences of money laundering, but different one. The
learned ASGI would submit that the unconstitutionality
arose on account of criteria for the application of twin
conditions contained in the opening part of Section 45(1)
not having rational nexus with the purpose and intent of
the PML Act. The Supreme Court struck down those
conditions being linked to the predicated offences and
not with the offence of money laundering. The defect
which was identified by the Supreme Court was cured by
the Legislative amendment. The arbitrariness that was
pointed out by the Supreme Court in applicability of twin
conditions de-linked with the offence of the PML Act has
been rectified by making criteria for application
uniformly, namely, for the offences under the PML Act. In
other words, by introducing new Legislative amendment,
( 11 ) criaba1149.21
the very basis of invalidity has been removed and cured.
He would submit that the Legislature has the power to
enact validating laws including power to amend the laws
by removing causes of invalidity.
10. In the aforesaid background, the issue which was
referred in the present matter is as to whether after
Legislative intervention vide Amended Act No.13 of 2018,
twin conditions which were struck down in case of Nikesh
Shah (supra) stands revived. At the inception, it is to
be noted that the constitutional validity of Amending Act
No. 13 of 2018 is not the subject matter of challenge.
Admittedly, the said challenge is pending before the
Supreme Court. However, both sides made exhaustive
submissions by contending that while answering the
reference, it needs to be gone into as to whether
Amending Act has cured the deficiency pointed out by the
Supreme Court in case of Nikesh Shah (supra) having
effect of reviving the conditions. The submissions are
made as if we are called upon to decide the question of
( 12 ) criaba1149.21
validity of the Amending Act under constitutional
jurisdiction.
11. We are confronted by divergent views expressed
by the learned Single Judges spread over the country.
Reverting to the reference order dated 03.12.2021, we
have noted that two decisions of this Court in case of
Sameer Bhujbal (supra) and Yogesh Deshmukh (supra) cited
before the referal Judge, became the genesis for the
reference. The learned Single Judge (Reference Court)
shown his disagreement with the view expressed by
coordinating Benches of this Court by expressing that the
very foundation or basis for striking down the twin
conditions has been removed by the Legislative amendment
and therefore in his opinion the twin conditions would
revive.
12. It necessitates us to go through the decision of
the learned Single Judge in Sameer Bhujbal's case, which
we consider to be a foundation, since it has been
( 13 ) criaba1149.21
referred by various High Courts while echoing the same
view. In Samir Bhujbal's case, this Court was dealing
with bail application in terms of section 439 of the Code
of Criminal Procedure for the offence punishable under
section 3 read with section 4 of the PML Act. The
argument was advanced that taking note of the decision in
the case of Nikesh Shah (supra), the Parliament has
brought amendment in the Finance Act, 2018 and thus
rectified the defects pointed out by the Supreme Court.
In short, it was contended that after amendment, the twin
conditions have been revived. The Court expressed
(Sameer Bhujbal's case) that the Supreme Court in Nikesh
Shah's case has struck down section 45 of the Act as a
whole. The Supreme Court expressed in para 45 that 'we
declare section 45(1) of the PML Act insofar as it
imposes two further conditions for release on bail, to be
unconstitutional as it violates Articles 14 and 21 of the
Constitution of India'. It is expressed that even after
amendment original section 45(1)(ii) has neither been
revived or resurrected by the Amending Act. Moreover,
( 14 ) criaba1149.21
the notification dated 29.03.2018 thereby amending
section 45(1) of the PML Act is silent about its
retrospective effect. Therefore, as of today, there is
no rigor of said twin conditions.
13. The second decision of this Court in line was in
case of Union of India Vs. Yogesh Narayanrao Deshmukh
(supra). In said case, the learned Single Judge took
note of earlier two decisions of this Court in cases of
Sameer Bhujbal (supra) and Deepak Virendra Kochar Vs.
Directorate of Enforcement (Cri.B.A. No.1322/2020 Bombay
High Court). It is expressed that, in Nikesh Shah's case
the Hon'ble Apex Court has struck down Section 45 of the
PML Act, as a whole having found it arbitrary and
violative of Article 14 and 21 of the Constitution of
India and not just applicability of twin conditions to
scheduled offences and, therefore expressed its agreement
with the view taken in earlier decisions in the cases of
Sameer Bhujbal (supra) and Deepak Kochhar (supra) along
with decision of Delhi High Court in Upendra Rai's case.
( 15 ) criaba1149.21
In short, taking a note of the Supreme Court's decision
in case of Nikesh Shah coupled with the views expressed
by this Court in earlier two decisions, same view has
been reiterated. In the said decision, we are unable to
find much deliberation on the point as to what was the
effect of subsequent amendment.
14. In the decision of Delhi High Court in case of
Upendra Rai (supra) while dealing with the issue, Delhi
High Court has expressed its agreement with a view taken
by this Court in case of Sameer Bhujbal (supra) and also
its agreement with a decision of Madhya Pradesh High
Court in case of Vinod Bhandari (supra) and accordingly
stated that it has no reason to take different view.
15. Another decision in case of Most. Ahilya Devi
Vs. State of Bihar (supra) rendered by Patna High Court
has been pressed into service. On careful examination,
we find that Patna High Court has simply stated that
(para 24) in view of clear language used in para 46 of
( 16 ) criaba1149.21
the Supreme Court decision in case of Nikesh Shah
(supra), the Amending Act does not have effect of
reviving twin conditions. In another decision of Manipur
High Court in case of Okram Ibobi Singh Vs. Directorate
of Enforcement (2020) SCC Online Mani 365 cited by the
applicants, similar view was taken that twin conditions
would not revive. We have also gone through some other
decisions in cases of Sai Chandrashekar Vs. Directorate
of Enforcement (2021) SCC Online Del 1081 and
Amarendradhari Singh Vs. Directorate of Enforcement, 2021
SCC Online Del 3901 of Delhi High Court, Prakash
Gurubaxani Vs. Directorate of Enforcement (2021) SCC
Online P & H 1567 of Punjab and Haryana High Court,
Pankaj Grover Vs. Directorate of Enforcement (2021) SCC
Online All 566 of Allahabad High Court, wherein same view
was expressed.
16. One another decision of Delhi High Court in case
of Dr.Shivinder Mohan Singh (supra) has been pressed into
service to uphold the submission that Legislative
( 17 ) criaba1149.21
amendment does not have effect of revival of twin
conditions. In said case, Delhi High Court has expressed
that, although there has been amendment to section 45 of
the PML Act, however, after the judgment of Nikesh Shah
(supra), there is no subsequent decision of the Supreme
Court holding that said two conditions to be
constitutionally valid, even when brought back by way of
amendment. We are not in agreement with the said line of
thinking, since there is presumption of constitutionality
of statutory amendment unless it is struck down by the
Courts. Admittedly, the Amending Act has not been struck
down meaning thereby its subsequent authorization by
Court for its applicability is unwarranted.
17. We have carefully examined the above decisions
which speak that Legislative amendment does not revive
the twin conditions which were declared unconstitutional
by the Supreme Court in Nikesh Shah's case. In most of
the cases, respective High Courts have reiterated the
view expressed by this Court in case of Sameer Bhujbal
( 18 ) criaba1149.21
(supra).
18. The learned ASGI has assiduously pointed out
that the view taken by Delhi High Court in case of
Upendra Rai Vs. Directorate of Enforcement (supra) has
been stayed by the Supreme Court in SLP (Cri) 2598/2020
vide its order dated 03.06.2020. Likewise, the decision
taken in case of Dr. Shivinder Singh (supra) has also
been stayed by the Supreme Court in its order dated
31.07.2020 in SLP (Cri) No.3474/2020. The learned ASGI
has submitted that the review petition was filed against
the decision of Delhi High Court in case of Bimal Kumar
Jain (supra) taking contrary view, however, by
reiterating the earlier view and expressing that there is
presumption in favour of constitutionality the review
petition was rejected.
19. The learned ASGI Mr.Anil Singh took us through
another line of thinking which speaks about a contrary
view stating that by way of amendment the Legislature has
( 19 ) criaba1149.21
cured the defect having result of reviving twin
conditions. In this regard he relied on the decision of
Orissa High Court in the case of Mohammad Arif (supra),
wherein it is expressed that in view of the fact that
section 45 has been amended after decision of Nikesh Shah
(supra), argument that twin conditions would not revive
does not hold good. On the same line our attention has
been invited to the decision of Delhi High Court in case
of Bimal Kumar Jain (supra). In said case by placing
reliance on the decision of the Supreme Court in case of
P.Chidambaram (supra) and Mohammad Arif (supra) it was
held that merely because the entire section is not re-
enacted would be of no consequence since the provision
even after being declared unconstitutional does not get
repealed or wiped up from the statute book and it only
become unenforceable. It is held that once the Parliament
steps in and cures defect pointed out by the
Constitutional Court, the defect appears to be cured and
the presumption of constitutionality is to apply to such
provisions.
( 20 ) criaba1149.21
20. Reverting to the rival submissions, we would
like to advert to the argument canvassed by Sr. Counsel
Mr. Sunil Manohar on the issue. His basic contention is
that unless all the defects cited by the Constitutional
Court have been cured or removed, there would be no
effect of the amendment and twin conditions would not
revive. His entire endeavour was to impress upon us that
the Constitutional Court has pointed several defects in
Section 45(1) of the PML Act, which then stood, all these
defects have not been removed and therefore by way of
amendment Legislature cannot undo what the Constitutional
Court has struck down. Learned Sr. Counsel Mr.Manohar
took us through various paragraphs of the judgment of
Nikesh Shah (supra) to contend that several defects have
been pointed out by the Constitutional Court of which
care has not been taken by the Amending Act of 2018.
21. In case of Nikesh Shah (supra), the very
question about Constitutional validity of Section 45 of
( 21 ) criaba1149.21
the PML Act with reference to twin conditions
incorporated therein was under challenge. After said
decision, the Legislature has amended the provision of
Section 45 (1) of the Act. The pre and post position of
section 45 is as below:−
PRE AND POST POSITION :-
Section 45 - Prior to Nikesh Section 45 - Post Nikesh
Tarachand Shah Tarachand Shah
Section 45. Offence to be Section 45. Offences to be
cognizable and non-bailable. cognizable and non-bailable.
(1) Notwithstanding (1)1[Notwithstanding anything
contained in the Code of contained in the Code of
Criminal Procedure, 1973 (2 Criminal Procedure, 1973 (2
of 1974), no person accused of 1974), no person accused
of an offence punishable for of an offence under this Act
a term of imprisonment of shall be released on bail or
more than three years under on his own bond unless--]
Part A of the Scheduled (i) the Public
shall be released on bail or Prosecutor has been given an
on his own bond unless- opportunity to oppose the
(i) the Public application for such release;
Prosecutor has been given an and
opportunity to oppose the (ii)where the Public
application for such Prosecutor opposes the
release; and application, the court is
(ii) where the Public satisfied that there are
Prosecutor opposes the reasonable grounds for
application, the Court is believing that he is not
satisfied that there are guilty of such offence and
reasonable grounds for that he is not likely to
believing that he is not commit any offence while on
guilty of such offence and bail:
that he is not likely to Provided that a person,
commit any offence while on who is under the age of
bail; sixteen years or is a woman
Provided that a person, or is sick or infirm, or is
( 22 ) criaba1149.21
who, is under the age of 16 accused either on his owns or
years, or is a woman or is along with other co-accused
sick or infirm, may be of money laundering a sum of
released on bail if the less than 1 crore rupees may
special Court so directs: be released on bail, if the
Provided further that special court so directs:
the special Court shall not Provided further that
take cognizance of any the Special Court shall not
offence punishable under take cognizance of any
Section 4 except upon a offence punishable under
complaint in writing made section 4 except upon a
by- complaint in writing made by--
(i)The director; or (i) the Director; or
(ii)Any officer of the (ii)any officer of the
Central Government or State Central Government or State
Government authorized in Government authorised in
writing in this behalf by writing in this behalf by the
the Central Government by a Central Government by a
General or a Special Order general or a special order
made in this behalf by that made in this behalf by that
Government. Government.
(1-A)Notwithstanding [(1A) Notwithstanding
anything contained in the anything contained in the
Code of Criminal Procedure, Code of Criminal Procedure,
1973 (2 of 1974), or any 1973 (2 of 1974), or any
other provision of this act, other provision of this Act,
no police officer shall no police officer shall
investigate into an offence investigate into an offence
under this Act unless under this Act unless
specifically authorized, by specifically authorised, by
the Central Government by a the Central Government by a
general or special order, general or special order,
and, subject to such and, subject to such
conditions as may be conditions as may be
prescribed; prescribed.]
(2)The limitation on (2) The limitation on
granting of bail specified granting of bail specified in
in sub Section (1) is in sub-section (1) is in
addition to the limitations addition to the limitations
under the Code of Criminal under the Code of Criminal
Procedure, 1973 (2 of 1974) Procedure, 1973 (2 of 1974)
or any other law for the or any other law for the time
time being in force on being in force on granting of
granting of bail. bail.
Explanation - xxxx
( 23 ) criaba1149.21
22. The learned Sr.Counsel Mr. Manohar took us
through paras 31 to 34 of the judgment wherein the
Supreme Court gave illustrations to contend that the
applicability of twin conditions would simply depend upon
predicated offences incorporated under Part-A of the
Schedule which has no nexus with the offences of money
laundering punishable under section 4 of the Act. The
Supreme Court after quoting few examples observed that
there would be arbitrary and discriminatory result about
applicability of the twin conditions.
23. Then learned Senior Counsel Mr.Sunil Manohar
took us through paras 37, 39 and 40 of the judgment in
the case of Nikesh Shah (supra) to contend that the
defects pointed out by the Supreme Court have not been
remedied by way of amendment. Unless all the defects are
cured by way of comprehensive Legislation, it has no
effect in reviving the conditions. In short the
classification based on sentence of imprisonment of more
( 24 ) criaba1149.21
than three years of an offence contained in Part-A of the
schedule, which is predicated offence having no relation
with the object of the Money Laundering Act has been
pointed.
24. On the similar line, learned Senior Counsel Mr.
Manohar took us through some of the sections of para 1 of
Part-A of the schedule, namely, Sections 327 and 411 of
the Indian Penal Code. Likewise, our attention is
invited to para 20 of Part-A of the schedule pertaining
to offence under the Copy Right Act and Para 25 relating
to offence under the Environment Protection Act. He
would submit that unless there is amendment to schedule
as these offences have no relation with act of money
laundering, it could not be said that the defect is
removed. The endeavour was to show certain offences
falling under Part-A of the Schedule to be having less
gravity.
25. Learned Senior Counsel Mr.Manohar took us
( 25 ) criaba1149.21
through para 42 of the judgment of Nikesh Shah (supra) to
contend that there is no parallel provision in the PML
Act excluding the applicability of the provisions of
section 438 of the Cr.P.C. like some other statues and
therefore said defect still survives. During the course
of argument we have pointed out to learned Sr.Counsel Mr.
Manohar that there are some statutes like MCOC Act and
NDPS Act, wherein the applicability of section 438 has
not been excluded despite existence of twin conditions.
Moreover, on this point learned ASGI in his additional
submission has placed on record recent decision of the
Supreme Court (dated 04.01.2022) in case of Assistant
Director of Enforcement Directorate Vs. Dr.V.C. Mohan
(Criminal Appeal No.21 of 2022), wherein in relation to
pre-arrest bail, judgment of Nikesh Shah was pressed into
service on the point of mandate of section 45 of the PML
Act. In that regard the Supreme Court expressed that the
principles and rigor of section 45 of the PML Act must
get triggered although application is under 438 of the
Cr.P.C.
( 26 ) criaba1149.21
26. Learned ASGI took us through preamble of the PML
Act which inter alia provides that it is an enactment to
prevent money laundering and to provide confiscation of
property derived from or involved in money laundering and
or matters connected there with or incidental thereto. It
is submitted that the offence of money laundering poses
serious threat to the financial system of the country.
Learned ASGI Mr.Anil Singh has submitted that already the
Supreme Court has upheld the validity of twin conditions,
namely, section 45(1) in its earlier decision in the case
of Gautam Kundu Vs. Directorate of Enforcement (2015) 15
SCC 1 later on approved by the Supreme Court in another
decision in case of Rohit Tandon Vs. Director of
Enforcement (2018) 11 SCC 46. His line of argument is
that in case of Nikesh Shah (supra) per se applicability
of the twin conditions to the PML Act has not been struck
down but considering the defects about its applicability
depending upon predicated offence twin conditions are
held unconstitutional, which now stood rectified.
( 27 ) criaba1149.21
27. Learned ASGI would contend that offence of money
laundering being an economic offence constitute a class
apart and need to be visited with different approach.
For this purpose he relied on the decision of Y.S. Jagan
Mohan Reddy Vs. CBI, (2013) 7 SCC 439. He also took us
through observations made by the Division Bench of this
Court in the case of Anil Vasantrao Deshmukh Vs.
Directorate of Enforcement, 2021 SCC On Line Bom 3641.
In said case, this Court took a note of legislative
history and the intent of the PML Act. It is observed
that large scale of money laundering affects the economic
interest of the country. Menace of money laundering has
international ramifications. The PML Act was enacted to
prevent money laundering and to provide for confiscation
of property derived from money laundering. It is
submission that keeping in mind object of enactment the
provisions are to be interpreted.
28. On the other hand, learned Sr. Counsel Mr.
( 28 ) criaba1149.21
Manohar would submit that there is absence of compelling
State interest like other enactments where the validity
of twin conditions has been upheld. In-fact, we are not
deciding the validity of the Amending provisions, as the
said challenge is pending before the Supreme Court. The
question under reference poses a limited issue about
effect of amendment on the twin conditions existed in
section 45 after the amendment.
LEGISLATIVE COMPETENCE TO AMEND THE LAWS :-
29. Learned Sr. Counsel Mr. Manohar placed reliance
on the decision of B.K. Pavitra and Ors. Vs. Union of
India, (2019) 16 SCC 129 to contend that the Legislature
cannot simply override declaration of invalidity without
remedying the basis on which law was held to be ultra
vires. However, in the same judgment it is also observed
that a declaration by a Court that a law is a
constitutionally invalid, does not fetter the authority
of the Legislature to remedy the basis on which the
( 29 ) criaba1149.21
declaration was issued by curing the ground for
invalidity. One has to essentially understand the reason
underlying declaration of invalidity. There is no dispute
about Legislative competence to enact the law on the
subject. The Hon'ble Supreme Court in the case of State
of Karnataka Vs. Karnataka Pawn Brokers Association
(2018) 6 SCC 363 has explained the Legislative powers to
enact validating laws. The relevant observations made in
para 24 runs as below :-
"24. On analysis of the aforesaid judgments
it can be said that the Legislature has the
power to enact validating laws including the
power to amend laws with retrospective effect.
However, this can be done to remove causes of
invalidity. When such a law is passed, the
Legislature basically corrects the errors which
have been pointed out in a judicial
pronouncement. Resultantly, it amends the law,
by removing the mistakes committed in the
earlier legislation, the effect of which is to
remove the basis and foundation of the judgment.
If this is done, the same does not amount to
statutory overruling.
( 30 ) criaba1149.21
25. However, the Legislature cannot set at
naught the judgments which have been pronounced
by amending the law not for the purpose of
making corrections or removing anomalies but to
bring in new provisions which did not exist
earlier. The Legislature may have the power to
remove the basis or foundation of the judicial
pronouncement by the Legislature cannot overturn
or set aside the judgment, that too
retrospectively by introducing a new provision.
The legislature is bound by the mandamus issued
by the court. A judicial pronouncement is
always binding unless the very fundamentals on
which it is based are altered and the decision
could not have been given in the altered
circumstances. The Legislature cannot, by way of
introducing an amendment, overturn a judicial
pronouncement and declare it to be wrong or a
nullity. What the Legislature can do is to
amend the provisions of the statute to remove
the basis of the judgment."
30. Learned ASGI would submit that the Legislature
vests with a power to correct the error pointed by the
( 31 ) criaba1149.21
Courts. In this regard he relied on the decision of the
Supreme Court in the case of Bakhtawar Trust and Ors. Vs.
M.D. Narayan and Ors. (2003) 5 SCC 298 with special
emphasis to para 26 which reads as under :-
"26. Where a legislature validates an
executive action repugnant to the statutory
provisions declared by a court of law, what the
legislature is required to do is first to remove
the very basis of invalidity and then validate
the executive action. In order to validate an
executive action or any provision of a statute,
it is not sufficient for the legislature to
declare that a judicial pronouncement given by a
court of law would not be binding, as the
legislature does not possess that power. A
decision of a court of law has a binding effect
unless the very basis upon which it is given is
so altered that the said decision would not have
been given in the changed circumstances."
31. On the same line he relied on the decision of
the Supreme Court in the case of Goa Foundation and
Another Vs. State of Goa and another (2016) 6 SCC 602 to
contend that even legislature has competence to pass an
( 32 ) criaba1149.21
Amending Act or validating Act with retrospective effect
removing the basis of the decision of the Court. The
relevant portion of said decision in para 24 reads as
below :-
"24. The principles on which first question
would require to be answered are not in doubt.
The power to invalidate a legislative or
executive act lies with the Court. A judicial
pronouncement, either declaratory or conferring
rights on the citizens cannot be set at naught
by a subsequent legislative act for that would
amount to an encroachment on the judicial
powers. However, the legislature would be
competent to pass an amending or a validating
act, if deemed fit, with retrospective effect
removing the basis of the decision of the Court.
Even in such a situation the courts may not
approve a retrospective deprivation of accrued
rights arising from a judgment by means of a
subsequent legislation (Madam Mohan Pathan V.
Union of India). However, where the Court's
judgment is purely declaratory, the courts will
lean in support of the legislative power to
remove the basis of a court judgment even
retrospectively, paving the way for a
( 33 ) criaba1149.21
restoration of the status quo ante. Though the
consequence may appear to be an exercise to
overcome the judicial pronouncement it is so
only at first blush; a closer scrutiny would
confer legitimacy on such an exercise as the
same is a normal adjunct of the legislative
power. The whole exercise is one of viewing the
different spheres of jurisdiction exercised by
the two bodies i.e. the judiciary and the
legislature. The balancing act, delicate as it
is, to the constitutional scheme is guided by
the well-defined values which have found
succinct manifestation in view of this Court in
Bakhtawar Trust."
32. The Legislative competence of introducing
Amending Act has not been disputed, nor countered on any
count. Certainly the legislature cannot by way of
amendment undo the decision of Courts. However, the
Legislature has power to rectify through amendment the
defect noticed or highlighted by the decision of the
Court. The purpose behind amendment is not to over rule
the decision of the Court but simply to correct it and to
( 34 ) criaba1149.21
remove the basis on which the provision has been declared
as unconstitutional.
33. We may note that when the Prevention of Money
Laundering Bill, 1999 was tabled before the Parliament,
the twin conditions for release on bail would apply only
insofar as offence under the PML Act itself. In case of
Nikesh Shah (supra) the Supreme Court took note of
initial Bill and observed that the said initial scheme
was radically changed when the Bill was converted into
enactment in the year 2002 and notified in 2005. The
amendment of the year 2018 has in one way restored the
position which was at its initial shape in the form of
Bill of 2009.
OBJECT OF THE AMENDING BILL :-
34. The Bill introduced on 1st February, 2018 for
amending the PML Act specifies its object under sub-
clause (v) to clause 204 and 205 of the Bill. The
( 35 ) criaba1149.21
relevant clause (v) of the Bill reads as below :-
"Clauses 204 and 205 of the Bill seeks to amend
certain provisions of the Prevention of Money-
laundering Act, 2002, which include the
following, namely :-
x x x x x x
(v) to amend section 45 of the Act relating to
offences to be cognizable and non-bailable and
to amend sub-section (1) of section 45 to
substitute the words "punishable for a term of
imprisonment of more than three years under Part
A of the Schedule" by words "under this Act" so
as to take a step further towards delinking the
Scheduled offence and money laundering offence.
Further, it seeks to amend the proviso in sub-
section (1) by inserting the words "or is
accused either on his own or along with other
co-accused of money laundering a sum of less
than Rupees one crore", after the words "sick or
infirm" to allow the Court to apply lenient bail
provisions in case of money laundering offence
is not grave in nature."
35. The object is to take step towards delinking the
( 36 ) criaba1149.21
scheduled offences and money laundering offence for
applicability of section 45 of the Act, inasmuch as by
way of amendment latitude has been given to the accused
of money laundering offence connecting to sum less than
rupees one crore.
36. Learned ASGI would submit that the Amending Act
has the effect of uniform application to all concerned
who have committed the offence under the PML Act. The
amending provision has taken care of the less serious
offences of money laundering involved with sum less than
one crore rupees. As a matter of fact, we are not
deciding the constitutional validity of the Amending Act
for making comments on its propriety and correctness.
37. Learned ASGI Mr. Anil Singh in a bid to convince
that the entire section does not require re-enactment
stated that there are some other provisions under section
45 of the Act, which still remains. For example, clause
1(A) of section 45 is a special provision for power to
( 37 ) criaba1149.21
investigate by authorized person which still exists. In
short, he would submit that reintroduction of twin
conditions is not necessary, as the section remains in
Statute book, though held certain portion ineffective by
decision of the Supreme Court.
38. It is a settled law that a statute must be given
its effect unless it is struck down. Always there is
presumption about constitutionality of the provisions of
law. For this purpose, we may refer to the decisions of
the Supreme Court in the cases of Nagaland Senior
Government Employees Welfare Association and Others Vs.
State of Nagaland and Ors., (2010) 7 SCC 643 and M.L.
Kamra Vs. The Chairman cum Managing Director, New India
Assurance Co. Ltd. and Anr., AIR 1992 SC 1072. Unless the
provision introduced by the Legislature is struck down or
wiped up from Statute book, its effect cannot be
nullified unless found to be exceptionally undoing the
earlier decision of the Court.
( 38 ) criaba1149.21
SCOPE OF THE REFERENCE :-
39. Essentially the reference arises out of bail
application. The limited question is referred to the
Larger Bench to decide whether the twin conditions of
Section 45(1) of the PML Act which were declared
unconstitutional by the Supreme Court in Nikesh Shah's
case stands revived by virtue of the subsequent
Legislative amendment. We remind ourselves that the
constitutional validity of the Amendment Act 13 of 2018
is not under challenge, which is admittedly pending
before the Supreme Court. The entire tenor of argument
advanced by the learned Senior Counsel Mr. Manohar is on
the line that all the defects pointed out by the
constitutional Court have not been cured and therefore
the Amendment Act 13 of 2018 has no effect of revival of
twin conditions. The endeavour was to impress that the
Amendment Act 2018 has not cured all the defects and thus
it has no effect in reviving twin conditions. The learned
ASGI has countered said submission by contending that all
( 39 ) criaba1149.21
the defects pointed out by the Supreme Court stood cured
by the Amendment Act 13 of 2018. The issue whether the
Amendment Act 13 of 2018 has cured all the defects
directly connects to the aspect of validity of the
Amendment Act 13 of 2018, which is not the matter for
consideration nor can be dealt under this reference
arising out of bail application filed under the statutory
provision.
40. This Court cannot deal with or decide indirectly
what it cannot do directly. The Supreme Court in case of
Union of India Vs. E.I.D. Parry (India) Ltd. (2000) 2 SCC
223 has expressed that the Court may not decide the
question not raised before it unless the pleadings
contain a contention that a particular rule is ultra
vires a statute or there is a question in respect of
which parties are at variance and which is the subject-
matter of an issue held. The Court is not within
jurisdiction in deciding the matter or considering the
validity of the rule and striking it down as ultra vires.
( 40 ) criaba1149.21
The issue in hand is limited to the extent of referred
question about the effect of the Amendment Act on twin
conditions and not to self-undertake the exercise whether
the Amending Act has cured the defects which is an issue
directly touching to the constitutional validity of the
Amendment Act of 2018.
41. Undeniably there has been no assail to the
constitutional validity of the Amendment Act, since the
reference arose out of bail application. In order to
raise the challenge to the constitutional validity, at
least prima facie acceptable grounds in support have to
be pleaded to sustain and entertain the challenge. The
said exercise would be, of course, by appropriate
proceeding in proper way. The Supreme Court in the case
of A.C. Estates Vs. Serajuddin & Co. (1973) 2 SCC 324 has
observed that when the question of ultra vires is wholly
foreign to the scope and jurisdiction of initial
authority, then it will not be open to the High Court to
go into those questions in proceeding arising out of said
( 41 ) criaba1149.21
initial proceeding.
42. Full Bench of this Court in the case of Shikshan
Prasarak Mandal, Akola Vs. Laxmikant Balkrishna Joshi &
Ors., 2004(1) Mh.L.J.619 has expressed that the Reference
Court exercises advisory and consultative and not
original jurisdiction under Article 226 of the
Constitution of India. Power under Rule 7 of Chapter-1
of the Bombay High Court Appellate Side Rules, 1960 is
distinct and separate than the one under Article 226 of
the Constitution and can generally be invoked for the
limited purpose to resolve inconsistency on the point of
law. Reference Bench should decide the questions which
are referred to it and it does not decide the issues
which are not referred to it. The Supreme Court in the
case of Indra Sawhney Etc. Etc vs Union Of India And
Others Etc., 1992 (3) SCC 217 has expressed that the
constitutional questions are decided only if they arises
for determination on the facts and absolutely necessary
to decide. The Court does not decide questions which do
( 42 ) criaba1149.21
not arise.
43. We may note that there is no proper challenge to
the constitutional validity of the Amending Act. Neither
there are grounds of challenge nor pleadings to that
effect, since obviously the reference was made while
dealing bail application. The Supreme Court in reported
case of New Delhi Municipal Committee Vs. State of
Punjab, AIR 1997 SC 2847 has observed that courts should,
particularly in constitutional matters, refrain from
expressing opinions on points not raised or not fully and
effectively argued by counsel on either side. Learned
Sr. Counsel Mr.Sunil Manohar raised several grounds by
reading judgment of Nikesh Shah (supra) to state that all
the deficiencies, which are pointed, have not been met.
In our view, this submission has come up without proper
challenge and pleadings, at the time of oral submission.
Certainly, the State has lost its opportunity to counter
such grounds of challenge besides making mere oral
submission.
( 43 ) criaba1149.21
44. The reference which arises out of bail
application is to the limited extent of expressing about
existence or non-existence of twin conditions after
amendment despite the earlier pronouncement of the
Supreme Court in the case of Nikesh Shah (supra).
Whether the Amendment Act No. 13 of 2018 has cured all
the defects pointed out by the Supreme Court is an issue
directly touching to the constitutional validity of the
Amendment Act which cannot be dealt without proper
pleading and proper challenge.
45. After decision of Nikesh Shah (supra) the
Parliament has introduced an amendment to Section 45 of
the Act, which has changed the entire complexion. Merely
because the entire section is not re-enacted, has no
consequence. Admittedly, the Amending Act is not struck
down yet by the Courts as the said challenge is pending.
Since the Legislative amendment on date is in existence,
presumption of constitutionality would apply. In the
( 44 ) criaba1149.21
subsequent pronouncement of P. Chidambaram's case
(supra), the Supreme Court took a note of its earlier
decision in case of Nikesh Shah (supra) and subsequent
amendment, but never expressed that despite amendment,
twin conditions do not survive. Our view is fortified by
recent decision of the Supreme Court in the case of
Assistant Director, Directorate of Enforcement Vs. V.C.
Mohan decided on 04.01.2022. In said case, High Court of
Telangana at Hyderabad has granted anticipatory bail in
connection with offence under the PML Act. It is
observed that though offence under the PML Act is
dependent on the predicate offences that does not mean
that while considering the prayer for bail, in connection
with offence under the PML Act, the mandate of section 45
of the PML Act would not come into play. Pertinent to
note that the judgment in Nikesh Shah's case was brought
to the notice of the Supreme Court. However, it is
observed that the underlying principles and rigor of
section 45 of the Act must get triggered although the
application is under section 438 of the Cr.P.C. The
( 45 ) criaba1149.21
reading of said judgment conveys that the Supreme Court
in its above pronouncement even after taking note of the
decision of Nikesh Shah (supra) has expressed that the
rigor of Section 45 of the PML Act would be attracted
while dealing with bail application.
46. It is argued that the Amending Act has not
reintroduced twin conditions in Section 45 of the Act. In
this regard, we may take a note of the decision of the
Supreme Court in the case of Shamrao V. Parulekar Vs. The
District Magistrate, Thana, Bombay 1952 SCR 683, of which
para 7 reads as below :-
"The rule is that when a subsequent
Act amends an earlier one in such a way as to
incorporate itself, or a part of itself, into
the earlier, then the earlier Act must
thereafter be read and construed (except where
that would lead to a repugnancy, inconsistency
or absurdity) as if the altered words had been
written into the earlier Act with pen and ink
and the old words scored out so that thereafter
there is no need to refer to the amending Act at
( 46 ) criaba1149.21
all. x x x x x "
. The above observations are useful to decide the
objection about requirement of reintroduction of twin
conditions.
47. The Amending Act has changed the entire
complexion. Notably section 45 of the Act has not been
repelled from the statute book. Therefore, in our view,
the section as it stood after amendment has to be read as
it stands. We do not find it necessary that the entire
section has to be resurrected afresh. The very effect of
the amendment has changed the periphery of its
applicability. The section which stands after amendment
has to be read as a whole.
48. Absence of reference in notification dated
29.03.2018 thereby amending section 45(1) of the Act
about its retrospective applicability (as observed in
Sameer Bhujbal's case), does not take away the force and
( 47 ) criaba1149.21
impact of amendment. It is for the Legislature to give
effect to the amending provisions prospectively or
retrospectively. However, that cannot be reason for
ineffecting the amending provisions of the Act.
CONCLUSION :-
49. We may reiterate that the reference arose out of
statutory jurisdiction and not constitutional
jurisdiction of this Court. Unless there is proper
challenge and pleadings, the issue of constitutional
validity cannot be undertaken. Undoubtedly, the
Legislature has power and competence to amend the
provisions of the Act. Unless the amended provision is
struck down by the Courts, it cannot be watered down.
Since after the amendment the entire complexion of
section 45 has been changed, we are not in agreement with
the contention that the entire section has to be re-
enacted by way of amendment after decision in the case of
Nikesh Shah (Supra). Therefore, in our opinion, the twin
( 48 ) criaba1149.21
conditions would revive and operate by virtue of
Amendment Act, which is on date in force. In view of
that, we answer the reference by stating that the twin
conditions in section 45(1) of the 2002 Act, which was
declared unconstitutional by the judgment of the Apex
Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC
1, stand revived in view of the Legislative intervention
vide Amendment Act 13 of 2018.
50. Registry shall place the bail application before
the concerned Court for further consideration.
[VINAY JOSHI,J.] [V.M. DESHPANDE,J.]
