Case Note & Summary
The judgment of the High Court of Judicature at Bombay, Nagpur Bench, arose out of Criminal Application (BA) No.1149 of 2021 filed by the applicant-accused under Section 439 of the Code of Criminal Procedure, 1972 read with Section 65 of the Prevention of Money-Laundering Act, 2002, seeking bail in ECIR/NGSZO/13/2021 registered by the Directorate of Enforcement, Sub-Zonal Office, Nagpur, for the offence of money laundering under Section 3 punishable under Section 4 of the PMLA. During the hearing, the learned Single Judge referred a question to a Larger Bench because of conflicting views among coordinate benches on the effect of the 2018 amendment to Section 45(1) of the PMLA after the Supreme Court's decision in Nikesh Tarachand Shah v. Union of India. The applicant contended that the Supreme Court had declared the twin conditions in Section 45(1) unconstitutional and that the subsequent amendment did not cure all defects; the Parliament could not nullify the judgment. The Enforcement Directorate argued that the amendment substituted 'under this Act' for the offending expression 'punishable for a term of imprisonment of more than three years under Part-A of the Schedule', thereby removing the basis of unconstitutionality and reviving the twin conditions. The Division Bench heard elaborate submissions on analogous provisions in TADA, NDPS, MCOCA, and SC/ST Act, and on the effect of the amendment. The court noted that the foundation for declaring the provision unconstitutional was the indiscriminate application based on scheduled offences, and the legislative intervention sought to restrict the provision to offences under the PMLA itself. The judgment text provided ends during the analysis of the respondent's submissions, and the final answer to the reference was not included in the extracted portion.
Headnote
A) Prevention of Money Laundering - Bail - Twin Conditions - Prevention of Money-Laundering Act, 2002, Section 45(1) - The court was called upon to determine whether the twin conditions for grant of bail contained in Section 45(1) of the PMLA, declared unconstitutional in Nikesh Tarachand Shah v. Union of India (2018) 11 SCC 1, stood revived after Amendment Act 13 of 2018, which substituted the expression 'punishable for a term of an imprisonment of more than three years under Part-A of the Schedule' with 'under this Act'. The reference arose due to conflicting views of coordinate benches. The applicant argued the entire section 45 was struck down and defects were not cured, while the respondent argued the amendment removed the unconstitutional basis. (Paras 1-10)
B) Constitutional Law - Article 14 and Article 21 - Arbitrariness and Right to Life - Prevention of Money-Laundering Act, 2002, Section 45(1) - The Supreme Court in Nikesh Shah held Section 45(1) unconstitutional because the twin conditions applied based on scheduled offences, many of which were not money laundering offences; the 2018 amendment substituted the predicate offence test with 'under this Act'. The Division Bench considered whether this legislative intervention cured the constitutional defect and revived the provision. (Paras 8-10)
Issue of Consideration
Whether the twin conditions in section 45(1) of the Prevention of Money-Laundering Act, 2002, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T. Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018?
Law Points
- effect of post-amended section 45 of Prevention of Money-Laundering Act
- 2002
- twin conditions for bail
- Nikesh Tarachand Shah v. Union of India
- Amendment Act 13 of 2018
- Articles 14 and 21 of Constitution
- bail under Section 439 CrPC read with Section 65 PMLA
- money laundering under Sections 3 and 4 PMLA
Case Details
2022 LawText (BOM) (01) 96
Criminal Application (BA) No.1149 of 2021
V.M. Deshpande, Vinay Joshi
Mr.S.V. Manohar, Mr.D.V. Chavan, Mr.G.S.Gour, Mr.Anil Singh, Mr. Aditya Thakkar, Ms. Mugdha Chandurkar, Ku. Divya Gontia
Ajay Kumar s/o. Chandraprakash Baheti
Directorate of Enforcement (Through Assistant Director, Sub-Zonal Officer, Nagpur)
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Nature of Litigation
Application for bail under Section 439 of CrPC read with Section 65 of Prevention of Money-Laundering Act, 2002 in connection with money laundering offence.
Remedy Sought
The applicant-accused sought grant of bail in ECIR/NGSZO/13/2021 registered at Directorate of Enforcement, Sub-Zonal Office, Nagpur, for offence under Section 3 punishable under Section 4 of PMLA.
Filing Reason
The applicant was accused of money laundering and filed bail application; during hearing, issue arose whether twin conditions under Section 45(1) PMLA apply after Supreme Court decision in Nikesh Shah and subsequent 2018 amendment.
Previous Decisions
The learned Single Judge, by order dated 03.12.2021, framed a question for larger bench because of conflicting views of coordinate benches; earlier decisions include Sameer M. Bhujbal and Yogesh Deshmukh holding twin conditions not applicable, while Delhi High Court in Bimal Kumar Jain held amendment revived twin conditions.
Issues
Whether the twin conditions in section 45(1) of the Prevention of Money-Laundering Act, 2002, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T. Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018?
Submissions/Arguments
Applicant-accused: twin conditions do not apply due to Nikesh Shah; Parliament cannot nullify Supreme Court judgment; entire section 45 struck down; defects not cured by 2018 amendment.
Respondent-Enforcement Directorate: amendment cured defects by substituting 'under this Act'; twin conditions revive for serious economic offence.
Judgment Excerpts
The center of focus revolves around the effect of post-amended section 45 of the Prevention of Money-Laundering Act, 2002 (PML Act) in terms of amendment introduced w.e.f. 19.04.2018, after decision of the Supreme Court in the case of Nikesh Tarachand Shah Vs. Union of India (2018) 11 SCC 1.
Whether the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018?
The learned ASGI argued that by substitution of words “under this Act”, in section 45 of the Act, now the twin conditions for bail with respect to an offence of money laundering which is a serious economic offence would revive.
Procedural History
The applicant-accused filed a bail application under Section 439 CrPC read with Section 65 PMLA in ECIR/NGSZO/13/2021 before the Bombay High Court, Nagpur Bench. During hearing before the learned Single Judge, counsel for the accused argued that twin conditions under Section 45(1) PMLA were not applicable in view of Nikesh Shah, while the Enforcement Directorate argued that the 2018 amendment revived them. The learned Single Judge expressed inability to concur with earlier coordinate bench decisions in Sameer Bhujbal and Yogesh Deshmukh, and by order dated 03.12.2021 framed a question for a Larger Bench. The Larger Bench reserved judgment on 06.01.2022 and pronounced on 28.01.2022.
Acts & Sections
- Prevention of Money-Laundering Act, 2002: 45(1), 65, 3, 4
- Code of Criminal Procedure, 1972: 439
- Terrorist and Disruptive Activities (Prevention) Act, 1987:
- Narcotic Drugs and Psychotropic Substances Act, 1985:
- Maharashtra Control of Organised Crime Act, 1999:
- Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989:
