SC’s review of PMLA verdict an exercise in futility?

Last month, a three-judge bench of the Supreme Court upheld the constitutional validity of certain provisions of the Prevention of Money Laundering Act, 2002 (‘PMLA’) in its judgment titled Vijay Madanlal Choudhary versus Union of India.

A petition seeking review of the said judgment, filed by politician and businessman Karti Chidambaram before the Supreme Court, was heard in open court on August 25 by a bench presided by the outgoing Chief Justice of India. N.V. Ramana, and it was unanimously decided to review the judgment on two aspects – (i) handing over the copy of the Enforcement Case Information Report to the accused, and (ii) reversal of presumption of innocence in the twin bail conditions under Section 45(1) of the PMLA.

Interestingly, the bench also comprised two of the three judges who were also part of the earlier bench which rendered the Vijay Madanlal Choudhary judgment: Justices Dinesh Maheshwari and C.T. Ravikumar.

I will critically analyse the possibility and scope of this review with respect to the twin bail conditions under section 45(1), against settled jurisprudence, and argue that the order admitting the review petition is erroneous. The better course, I will demonstrate, would have been to constitute a larger bench to adjudicate on the issue.

Section 45 of the PMLA is the relevant provision for seeking bail for someone accused of the offence of money-laundering under the Act. It starts with a non obstante clause, stating that notwithstanding anything contained in the Code of Criminal Procedure, 1973 (‘CrPC’), no person accused of an offence under the Act shall be released on bail unless the twin conditions laid thereunder are satisfied. The said twin conditions provide that the accused must not be released on bail unless:

(i) The Public Prosecutor has been given opportunity to oppose the application for such release; and

(ii) Where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail

The contentious provision had fallen for consideration of the Supreme Court in Nikesh Tarachand Shah versus Union of India (2017) wherein a two-judge division bench was called on to decide the constitutionality of the twin conditions under section 45(1).

The provision was struck down as unconstitutional, being violative of Articles 14 and 21 of the Constitution, primarily for the reason that section 45(1), as it then stood before the 2018 amendment, predicated application of the twin conditions to the offences specified in Part A of the Act’s Schedule with punishment of more than three years imprisonment even though they were not linked to the offence of money laundering under the Act, and that the procedure of bail for such offences has already been laid down under the CrPC.

After the judgment, section 45(1) was amended in 2018, and it has been clarified by Finance Act (No. 2), 2019 that the amendment shall apply retrospectively.

Although the Supreme Court struck down section 45(1) for the reason stated above, the twin conditions in themselves were not found problematic.

The court acknowledged that these conditions turned the presumption of innocence on its head and made drastic inroads into personal liberty of the accused protected under Article 21 of the Constitution, but the conditions were sustainable as long as there existed a compelling State interest in tackling such crimes, relying on its earlier judgment in Kartar Singh versus State of Punjab (1994), in which similar twin conditions for bail under Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1985 (now repealed) were upheld.

Further, nowhere in the judgment did the court hold that there was no such compelling State interest when it comes to the offence of money-laundering. Thus, it is clear that the twin conditions under section 45(1) of the PMLA were struck down only because of their application to the scheduled offences, and not because there was no compelling interest.

The defect in section 45(1), as held unconstitutional in Nikesh Tarachand Shah, was cured by the Parliament by the Amendment Act of 2018, and the wordings of the provision were changed from “no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule” to “no person accused of an offence under the Act”, meaning that now the twin conditions for bail would apply only to the offence of money laundering under the Act.

In Vijay Madanlal Choudhary, among other things, section 45(1) as it now stands after the 2018 amendment, was put to constitutional muster. The Supreme Court elaborated on the seriousness and heinous nature of the offence of money laundering and upheld the provision while explicitly stating that there exists compelling State interest to have it on the statute book.

There are only two possible ways in which review of this judgment with regard to the presumption of innocence while granting bail can be sought: (i) that the twin conditions in themselves are unreasonable, or (ii) that the application of the twin conditions to the offence of money laundering under the Act is unjustified.

In the first case, the matter cannot be heard by a three-judge bench and will have to be referred to a constitution bench of at least seven judges, as the twin conditions had been upheld by a five-judge Constitution bench of the Supreme Court in Kartar Singh, as mentioned above. It is an established position of law that benches of a numerically larger strength overrule the decisions arrived at by smaller ones, unless the former can be distinguished.

Moreover, similar twin conditions have been upheld by the Supreme Court with regard to several other penal statutes.

For instance, Section 21(4) of the Maharashtra Control of Organised Crime Act, 1999 was upheld by a three-judge bench of the Supreme Court in Ranjitsing Brahmajeetsing Sharma versus State of Maharashtra (2005) while explaining that the requirement of there being reasonable grounds to believe that the accused has not committed the offence does not mean that the court has to arrive at a positive finding with regard to the guilt of the accused.

Further, similar bail conditions under Section 37(1) of the Narcotic Drugs and Psychotropic Substances Act, 1985 have been upheld by division benches of the Supreme Court in Union of India versus Shri Shiv Shanker Kesari (2007) and Union of India versus Rattan Mallik alias Habul (2009).

In the second case, the relief sought will be to declare that the application of the twin conditions to the offence of money laundering under the Act is unjustified, which will require the review petitioner to convince the court regarding lack of compelling State interest.

The possibilities of such an argument being accepted by the court seem bleak in view of the grounds for review of a criminal judgment under Article 137 of the Constitution.

According to Order 47, Rule 1 of the Supreme Court Rules, 2013, such a judgment can be reviewed only if there is an error apparent on the face of the record. The scope of such error which entails review of a judgment has been explained by the Supreme Court in a catena of its judgments.

In Sheonandan Paswan versus State of Bihar (1982), the Supreme Court explained that an error is not apparent on the face of record if it is not self-evident and if it required an examination or argument to establish it.

In Lily Thomas versus Union of India (2000), the Supreme Court refused to review its earlier judgment in Sarla Mudgal versus Union of India (1995) and held that the mere fact that two views on the same subject are possible is no ground to review the earlier judgment passed by a bench of the same strength.

It becomes clear that it is only if the review petitioner is able to convince the court regarding a manifest and patent error in the earlier judgment that the review will succeed, which seems doubtful as the arguments of the petitioners in Vijay Madanlal Choudhary with regard to the twin conditions had already been considered in detail, and merely because the review petitioner wants a different view to be taken does not bring the case within the ambit of “error apparent on the face of record”.

Thus, the order admitting the review petition seems erroneous, and an exercise which ultimately will result in futility. The only course available with the Supreme Court is to constitute a larger bench and consider the validity of the twin conditions with regard to all the statutes incorporating them.

(IPA Service)

Views are personal

(Courtesy: The Leaflet)