Making clear that the State has a compelling interest in imposing stringent bail conditions for economic offences, the Supreme Court Wednesday upheld the Prevention of Money Laundering Act, including its stringent bail conditions that impose a reverse burden of proof on the accused. “…by any stretch of imagination, it cannot be said that there is no compelling State interest in providing stringent conditions of bail for the offence of money-laundering,” the Court said. In upholding the reverse burden of proof condition for grant of bail, the Court also overruled its own order of November 2017 that had declared the bail criteria unconstitutional. In Nikesh Tarachand Shah vs Union of India (2017), the two-judge bench of Justices Rohinton Nariman and Sanjay Kishan Kaul, had declared the ‘twin test’ of bail under PMLA as unconstitutional since it was manifestly arbitrary. “We must not forget that Section 45 is a drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence. Before application of a section which makes drastic inroads into the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India, we must be doubly sure that such provision furthers a compelling State interest for tackling serious crime. Absent any such compelling State interest, the indiscriminate application of the provisions of Section 45 will certainly violate Article 21 of the Constitution. Provisions akin to Section 45 have only been upheld on the ground that there is a compelling State interest in tackling crimes of an extremely heinous nature,” the bench had said. It had said that stringent bail conditions can be imposed in exceptional circumstances such as anti-terrorism laws, but cannot be manifestly arbitrary. The ruling Wednesday by Justices A M Khanwilkar, Dinesh Maheshwari and C T Ravikumar - Justice Khanwilkar will retire on July 29 - states that "declaration by the Parliament itself is testimony of compelling necessity to have stringent regime (enactment) for prevention and control of the menace of money-laundering”. It also expounded the theory of “soft state” which the Court said is used to “describe a nation which is not capable of preventing the offence of money laundering”. The Court relied on Article 39 of the Constitution, part of the Directive Principles of State Policy that mandates the State to prevent concentration of wealth, to uphold the stringent bail conditions under PMLA. “In view of the gravity of the fallout of money laundering activities having transnational impact, a special procedural law for prevention and regulation, including to prosecute the person involved, has been enacted, grouping the offenders involved in the process or activity connected with the proceeds of crime as a separate class from ordinary criminals. The offence of money-laundering has been regarded as an aggravated form of crime “world over”. It is, therefore, a separate class of offence requiring effective and stringent measures to combat the menace of money laundering,” the Court held.
