A bench headed by Justice Sudhir Kumar Jain on Tuesday said the trial court had failed to evaluate the material produced before it by the accused. Enforcement Directorate (Ed).
The stay on bail came after the ED challenged the trial court order, calling it “perverse”, “one-sided” and “misdirected”. It also argued that it was not given adequate opportunity to argue the case. The ED lawyers had also asked the trial court to keep its order in abeyance for 48 hours so that they could approach higher courts, which did not consider it.
In the high court, the ED sought stay of the bail order on the ground that the trial court had failed to apply the ‘twin test’ for granting bail under Section 45 of the PMLA.
The high court stayed the trial court’s order, saying it was “of the view that Section 45 PMLA has not been properly discussed by the trial court”, reports Bar & Bench.
What is the ‘Twin Test’?
By amending the Prevention of Money Laundering Act (PMLA) in March 2018, the Centre revived a twin condition under Section 45(1) of the Act that makes it difficult to obtain or grant bail in money laundering cases. Section 45 of the PMLA deals with ‘twin conditions’ of bail.
As per the conditions, when an accused in a money laundering case applies for bail, the court must first give an opportunity of being heard to the public prosecutor.
The said section states that no person accused of an offence under PMLA shall be released on bail unless:
1. The Public Prosecutor has been given an opportunity of opposing the application for such release, and
2. Where the Public Prosecutor opposes the application, the Court believes that there are reasonable grounds to believe:
– that he is not guilty of such offence and
– There is no possibility of him committing any crime while on bail.
Thus, the burden of proving his innocence falls on the accused.
The offence of money laundering is based on the following proceeds of crime Offences arising through certain other offences called predicate offences, for which a separate First Information Report (FIR) is lodged. In force since 2002, Section 45 had put the onus on the accused to demonstrate lack of guilt in the ‘Schedule A’ offences – several predicate offences under the Indian Penal Code (IPC), Prevention of Corruption Act and drug offences under the Narcotic Drugs and Psychotropic Substances (NDPS) Act – that attract rigorous imprisonment for more than 3 years.
In 2018, in the case of Nikesh Tarachand Shah vs UOI, the Supreme Court struck down this section, terming it arbitrary and violative of Articles 14 and 21 of the Constitution of India.
The Supreme Court had said that Section 45 was a “draconian provision which inverts the presumption of innocence, which is fundamental for any person accused of any offence.”
On March 29, 2018, the Central government amended Section 45(1) of the PMLA Act. It replaced ‘scheduled offences’ with “offences under the PMLA”. After this amendment, the language of Section 45 was brought at par with other special laws like TADA/MCOCA/Companies Act, which laid down dual conditions for granting bail.
What did the trial court say while granting bail to Kejriwal?
The trial court had on June 20 granted bail to Arvind Kejriwal, saying the Enforcement Directorate had failed to produce direct evidence linking the Delhi Chief Minister to the proceeds of crime in the money laundering case against him.
Granting relief to Kejriwal, Special Judge Nyaay Bindu said that prima facie his guilt has not been proved yet.
“It may be possible that some persons known to the applicant may be involved in some crime…but the Enforcement Directorate has failed to produce any direct evidence against the applicant regarding the proceeds of crime,” the judge said.
He also questioned the ED’s silence on Kejriwal’s claim that he was arrested in the money laundering case related to the alleged excise scam without being named in either the CBI FIR or the ECIR filed by the anti-money laundering agency. The Enforcement Case Information Report (ECIR) is the ED’s version of the FIR.
The judge said the ED had failed to explain how much time it took to trace the entire source of the money.
“This means that till the ED completes the process of ascertaining the balance amount, the accused will have to remain behind bars, that too without any proper evidence against him. This is also not an acceptable argument of the ED,” the judge said.
He said that the principle of law that every person is presumed to be innocent until proven guilty does not appear to be applicable in this case in respect of the present accused.
The judge quoted Benjamin Franklin, one of America’s founding fathers, who said, “It is better that 100 guilty men should escape than that one innocent man should suffer.”
“This principle casts an obligation on the court not only to prevent guilty persons from escaping justice but also to ensure that no innocent person is punished. There have been thousands of cases in which the accused have had to face prolonged trials and suffer as a result until they are acquitted by the court on grounds of innocence.
He said, “Unfortunately, the mental and physical suffering of such a person cannot be compensated in any way.”
