Recently, the Supreme Court set aside a Patna High Court order granting bail in an ED case, directing the accused to surrender within a week. It criticized the High Court's “casual and cavalier” approach, stating that mandatory bail conditions under Section 45 of the PMLA were disregarded.
The matter pertained to Kanhaiya Prasad, son of JD(U) MLC Radha Charan Sah, arrested by the ED in a case involving alleged illegal sand mining in Bihar. The Patna High Court granted bail to the accused in May last year, citing the principle that “jail is an exception and bail the rule.” It noted that stringent bail provisions under the PMLA should not impose an “absolute restraint” on the grant of bail. The High Court further observed that the accused had been subjected to “testimonial compulsion” and exercised judicial discretion in granting relief. Following this order, the accused was released from custody. However, the ED challenged the bail before the Supreme Court, arguing that the High Court failed to consider the statutory mandate of Section 45 of the PMLA.
The Enforcement Directorate contended that the High Court overlooked the twin conditions prescribed under Section 45 of the PMLA, which require courts to establish (i) that the accused is not guilty of the offence, and (ii) that the accused is not likely to commit any further offence while on bail. The ED emphasized that the High Court had not recorded any such findings, rendering the bail order legally untenable.
On the other hand, the counsel for the accused argued that prolonged incarceration without trial violated fundamental rights under Article 21 of the Constitution. The defence relied on previous Supreme Court rulings that emphasized the need to balance stringent bail provisions with individual liberty and the right to a fair trial.
Observations of the Supreme Court
Justice Bela M Trivedi, delivering the judgment, held that the Patna High Court granted bail to the accused “without considering the rigours of Section 45... on absolutely extraneous and irrelevant considerations.” The Court reiterated that compliance with Section 45 of the PMLA is mandatory and cannot be overlooked by exercising judicial discretion.
Referring to its judgment in Vijay Madanlal Choudhary v. Union of India, the Court underscored that fulfilling the twin conditions under Section 45 is essential for bail in PMLA cases. The bench observed “There is no finding whatsoever recorded in the impugned order that there were reasonable grounds for believing that the respondent was not guilty of the alleged offence under the Act and that he was not likely to commit any offence while on bail. Non-compliance with the mandatory requirement of Section 45 has, on the face of it, made the impugned order unsustainable and untenable in the eye of law.”
The Court further noted that while certain aspects of the Vijay Madanlal Choudhary ruling are under reconsideration, the principle that statutory conditions for bail under PMLA must be satisfied remains binding.
The Top Court allowed the ED's plea for cancellation of bail and directed the accused to surrender before the Special Court within a week. It reiterated that High Courts must exercise caution while granting bail in money laundering cases, ensuring strict adherence to statutory provisions.
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