'Bail is the Rule, Jail is the Exception' even in PMLA Cases

The Apex Court of the country in a recent judgment has once again put its stamp on the dictum that the remedy lies in jail but the rule is bail even in cases related to PMLA. The judgment has been passed by the bench consisting of Justices BR Gavai and KV Viswanathan and this has far-reaching implications in so far as the meaning and applicability of bails within the contextual framework of PMLA is concerned. 

Background: The PMLA and Bail Provisions 

The Prevention of Money Laundering Act (PMLA) is a law in India against money laundering and related crimes. It contains redoubtable measures that are intended to prevent money laundering conduct and the related properties that are derived from money laundering activities. One of the most debated provisions under the PMLA is Section 45, which imposes twin conditions for the grant of bail:

• The court has to be convinced that indeed there are reasonable and probable grounds for holding the belief that the accused had not committed the offence. 
• The accused shall not in any way engage in the commission of any offense while on bail. 

These conditions have made the attempt to seek bail under the PMLA extremely difficult which has resulted into worrying situations of bail prisoners under the Act.
 

The Supreme Court's Judgment 

In the case of Prem Prakash v. Union of India through the Directorate of Enforcement (2024) (SLP(Crl) No. 5416/2024), the Hon’ble Supreme Court has quashed the judgment passed by the Jharkhand High Court whereby an application for bail in a money laundering case was rejected. The bench of the Supreme Court while releasing the petitioner on bail did reiterate that Section 45 of PMLA does not change the legal position that bail has to be the rule and jail the exception. 

While delivering the judgment, Justice KV Viswanathan explained that the rationale for the principle that “Bail is the rule and Jail is the exception” is well grounded in Article 21 of the Constitution of India, which provides for the right to life and personal liberty. The Court also said that liberty is the basic principle and restriction of liberty should not be done unless it is through a legal and reasonable process made available according to the law. The two requisites under Section 45 of the PMLA, the Court held, do not transform this constitutional precept into one where freedom deprivation is standard. 

Consequence of the Judgment on PMLA Cases 

This judgment may be essential for accused persons under the PMLA as it is a reminder for courts to exercise caution in the application of the twin conditions for bail as against the constitution’s foundational principle of personal liberty. The judgment of the Supreme Court also points to the fact that it is impossible to disregard the procedural means protected by the Constitution, even if the question is about a grave crime such as money laundering. 

The Court also pointed out that for the reverse burden provided under Section 24 of the PMLA to arise, the prosecution must first make out a prima facie case on foundational facts. This means that there is an added safeguard to protect the accused’s rights and to prevent unfair denial of bail. 

In this context, certain issues arise as to whether statements of the nature aforesaid made to the Enforcement Directorate are admissible as evidence in court. 

Another facet of the judgment is the inadmissibility of statements made by the accused to the Enforcement Directorate (ED) during the arrest under PMLA. The Supreme Court observed that such a statement if sought to be utilized to prosecute the accused in another PMLA offence is not permissible. This ruling adds another level of protection against the accused incriminating himself or herself by protecting the rights of the accused during the investigation. 

Critical Analysis

The judgment of the Hon’ble Supreme Court in the present case is a landmark in the context of the interpretation of the PMLA especially concerning the grant of bail. Thus, the Court by stating that bail is the rule and jail is the exception has restored the legal and constitutional rights of the accused as also the rights of the state in the fulfillment of its duty to prevent and curbing of financial crimes. Thus, the focus on Article 21 of the Constitution guarantees that the concept of personal liberty remains protected even in such grave offenses as money laundering. 

However, the examples therein also reaffirm the relevance of compliance with the two conditions laid down under Section 45 of the PMLA to maintain the rigmarole of legal checks to ensure that those accused of grave money laundering offenses are not granted bail freely. The ruling also clears up doubt about sections of the law that prohibit the use of self-incriminating statements made to the Enforcement Directorate in one case as evidence in another so that it cannot be easily abused during probes. In turn, this judgment offers a rationale for efficiently prosecuting financial crimes while maintaining public rights, easing future judgments under the PMLA.

Conclusion 

In the present case, the Supreme Court judgment is a classic example to understand the constitutional mandate of the provision of bail and detention being an exception rather than a rule in the case of PMLA as well. This precedent was established by the Court to mean a complete focus on personal liberty and the undue need for a legal procedure valid and reasonable in conjunction with money laundering cases. This judgment is one of the steps which potentially paves the way to the protection of the rights of the accused and the proper functioning of the PMLA without disregarding the principles of justice and fairness.
 

FAQs 

What does it mean that bail is the general principle and jail is the exception in any PMLA case? 

The Supreme Court has held that the fundamental rights provisions of the constitution and in particular Article 21, personal liberty is the rule and imprisonment the exception. Thus, if there are no reasons to oppose, bail should be granted even in PMLA cases. 

What are the two conditions mentioned under Section 45 of the PMLA? 

The twin conditions state that the court must be convinced that there is reasonable ground to believe that the accused person is innocent of the offense charged and that the accused person will not be likely to interfere with the processes of the law or commit further offenses while on bail. 

Are the statements recorded before the Enforcement Directorate admissible in other PMLA cases against the accused? 

However, in a recent judgment, the Supreme Court has held that the statements made during custody in connection to the offense under the PMLA cannot be used in any other case under the same act. 

How does this Supreme Court’s judgment alter the prospects of obtaining bail under the PMLA? 

The ruling also confirms that bail should be the default position, even in PMLA cases, as long as the two conditions under Section 45 are satisfied. This also enhances the possibility of the accused being granted a bond especially if the prosecution cannot build a strong case against him/her. 

What should be considered when evaluating the reverse burden of proof under Section 24 of the PMLA? 

The foundation facts are what the prosecution must prove to shift the burden of proof to the accused. This means that before the accused is put on the defensive and compelled to justify their actions, the prosecution must establish a case.