Case Note & Summary
The Supreme Court set aside the bail granted by the Patna High Court to Kanhaiya Prasad in a money laundering case under the Prevention of Money Laundering Act, 2002 (PMLA). The case arose from 20 FIRs alleging illegal mining and sale of sand, causing revenue loss of over Rs.161 crore. The Enforcement Directorate (ED) registered an ECIR and investigated, finding that the respondent had handled proceeds of crime amounting to Rs.17,26,85,809/- used for renovation of a resort and construction of a school. The respondent was arrested and a prosecution complaint was filed. The High Court granted bail, holding that statements under Section 50 PMLA were inadmissible under Article 20(3) and that the twin conditions of Section 45 were not applicable. The Supreme Court held that the High Court erred in ignoring the mandatory twin conditions under Section 45 PMLA, which require the court to be satisfied that there are reasonable grounds for believing the accused is not guilty and not likely to commit any offence while on bail. The Court also clarified that statements under Section 50 are admissible and not violative of Article 20(3), as held in Vijay Madanlal Choudhary. The Supreme Court set aside the bail order and remanded the matter to the High Court for fresh consideration in accordance with law.
Headnote
A) Criminal Law - Prevention of Money Laundering - Bail - Section 45 PMLA - Twin Conditions - The High Court granted bail to the respondent accused of money laundering involving proceeds of crime of Rs.17,26,85,809/-. The Supreme Court held that the High Court failed to comply with the mandatory twin conditions under Section 45(1)(b)(ii) PMLA, i.e., reasonable grounds for believing that the accused is not guilty and not likely to commit any offence while on bail. The High Court's reliance on Article 20(3) to discard Section 50 statements was erroneous as per Vijay Madanlal Choudhary. (Paras 10-18)
B) Criminal Law - Prevention of Money Laundering - Burden of Proof - Section 24 PMLA - The burden to prove that proceeds of crime are not involved in money laundering lies on the person charged. The High Court did not consider this reverse burden while granting bail. (Para 13)
C) Criminal Law - Prevention of Money Laundering - Admissibility of Statements - Section 50 PMLA - Statements recorded under Section 50 are admissible and not violative of Article 20(3) of the Constitution. The High Court's view that such statements are inadmissible was contrary to the law laid down in Vijay Madanlal Choudhary. (Paras 15-16)
Issue of Consideration
Whether the High Court was justified in granting bail to the respondent under Section 45 of the Prevention of Money Laundering Act, 2002, without satisfying the mandatory twin conditions, and whether the High Court correctly interpreted the ratio in Vijay Madanlal Choudhary.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned order of the High Court granting bail, and remanded the matter to the High Court for fresh consideration in accordance with law, keeping all contentions open.
Law Points
- Section 45 PMLA imposes mandatory twin conditions for bail
- overriding CrPC
- burden of proof on accused under Section 24 PMLA
- statements under Section 50 PMLA are admissible and not violative of Article 20(3)
- PMLA is a special legislation with overriding effect.
Case Details
2025 LawText (SC) (2) 133
Criminal Appeal No. 728 of 2025 (@ SLP (Crl.) No. 7140 of 2024)
Union of India through the Assistant Director
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Nature of Litigation
Criminal appeal against grant of bail in a money laundering case under PMLA.
Remedy Sought
Appellant (Union of India through ED) sought setting aside of the High Court order granting bail to the respondent.
Filing Reason
The High Court granted bail to the respondent without satisfying the mandatory twin conditions under Section 45 PMLA and misinterpreted the law regarding admissibility of statements under Section 50 PMLA.
Previous Decisions
The High Court of Judicature at Patna allowed Criminal Miscellaneous No. 17738/2024 and released the respondent on bail on 06.05.2024.
Issues
Whether the High Court correctly applied the twin conditions under Section 45 PMLA while granting bail.
Whether statements recorded under Section 50 PMLA are admissible and not violative of Article 20(3) of the Constitution.
Whether the High Court erred in ignoring the burden of proof under Section 24 PMLA.
Submissions/Arguments
Appellant-ED argued that the High Court ignored the mandatory twin conditions of Section 45 PMLA and misinterpreted Vijay Madanlal Choudhary, and that the offence is serious involving huge proceeds of crime.
Respondent argued that the case was based on inadmissible statements under Section 50 PMLA, that he cooperated with ED, and that the High Court correctly granted bail.
Ratio Decidendi
Section 45 PMLA imposes mandatory twin conditions for grant of bail: (i) opportunity to Public Prosecutor to oppose, and (ii) court satisfaction that there are reasonable grounds for believing the accused is not guilty and not likely to commit any offence while on bail. These conditions override CrPC. Statements under Section 50 PMLA are admissible and not violative of Article 20(3). The burden of proof under Section 24 PMLA lies on the accused.
Judgment Excerpts
Section 45 imposes two conditions for the grant of bail to any person, accused of an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule. ... these two conditions are mandatory in nature and they need to be complied with before the accused person is released on bail.
The High Court has thoroughly misinterpreted and misread the ratio of the judgments particularly of the judgment of the three-judge bench in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors.
The provision post the 2018 Amendment, is in the nature of no bail in relation to the offence of money laundering unless the twin conditions are fulfilled.
Procedural History
FIRs registered at various police stations in Bihar for illegal mining. ED registered ECIR on 15.03.2023. Respondent arrested on 18.09.2023. Prosecution complaint filed on 10.11.2023. Respondent filed bail application before Patna High Court, which was allowed on 06.05.2024. Union of India appealed to Supreme Court by special leave.
Acts & Sections
- Prevention of Money Laundering Act, 2002: Section 3, Section 4, Section 17, Section 24, Section 45, Section 50, Section 65, Section 71
- Indian Penal Code, 1860: Section 38, Section 120B, Section 378, Section 379, Section 406, Section 409, Section 411, Section 420, Section 467, Section 468, Section 471
- Bihar Mineral (Concession, Prevention of Illegal Mining, Transportation & Storage) Rule, 2019: Section 39(3)
- Code of Criminal Procedure, 1973: Section 439
- Constitution of India: Article 20(3)
