TAG: GS 2: POLITY
THE CONTEXT: In a significant ruling, the Supreme Court reaffirmed that the principle “bail is the rule, jail is the exception” applies even in cases registered under the Prevention of Money Laundering Act (PMLA), 2002.
EXPLANATION:
- This decision underscores the Court’s commitment to upholding individual liberty as enshrined in Article 21 of the Constitution, which guarantees the right to life and personal liberty.
The Case of Prem Prakash and the PMLA
- The latest affirmation of this principle came as the Supreme Court granted bail to Prem Prakash, an accused in a PMLA case in Jharkhand.
- The Enforcement Directorate had named Prakash in its investigations.
- The bench referred to the Supreme Court’s previous ruling in Vijay Madanlal Choudhary and Others vs. Union of India and Others on July 27, 2022.
- This ruling had upheld the constitutional validity of the PMLA and confirmed the powers vested in the Enforcement Directorate under the Act.
- Justice writing for the bench cited the Vijay Madanlal Choudhary judgment, which stated that although Section 45 of the PMLA imposes conditions for granting bail, it does not create an absolute bar against bail.
- This interpretation is crucial, as it clarifies that the rigorous conditions set by Section 45 are not meant to nullify the basic principle that bail should generally be granted, and jail should be the exception.
The Significance of Article 21: Balancing Liberty and Judicial Process
- The Supreme Court highlighted that the principle “bail is the rule and jail is the exception” is a paraphrasing of Article 21 of the Constitution.
- Article 21 states that no person shall be deprived of his life or personal liberty except according to the procedure established by law.
- The Court emphasized that liberty is the rule, and deprivation is the exception.
- This deprivation must only occur following a valid and reasonable procedure established by law.
- The bench clarified that Section 45 of the PMLA, by imposing stringent conditions for bail, does not alter the fundamental legal principle.
- Instead, it requires that certain conditions must be met before bail can be granted.
- These conditions are intended to ensure that only those accused who pose a real threat of absconding or tampering with evidence are kept in custody.
Implications for PMLA Cases: The Sisodia Judgment as a Precedent
- Justice Viswanathan noted that the observations made in the Vijay Madanlal Choudhary judgment should be read in conjunction with a recent pronouncement of the Court on August 9, 2024, in the case involving former Delhi Deputy Chief Minister Manish Sisodia.
- In this case, the Court granted bail to Sisodia in both Central Bureau of Investigation (CBI) and Enforcement Directorate cases, stating that the principle of “bail is the rule, jail is the exception” should be recognized by trial courts and High Courts.
- The Court pointed out that the non-grant of bail even in straightforward cases has resulted in a surge of bail petitions, adding to the already massive backlog in the judicial system.
- The Court urged lower courts to apply the principle that bail is the rule, thus reducing unnecessary incarceration and the consequent burden on the judicial system.
The Court’s View on Prolonged Incarceration
- The Supreme Court bench expressed concerns about prolonged incarceration of individuals awaiting trial, noting that keeping people behind bars for extended periods, hoping for a speedy trial, effectively amounts to punishment without trial.
- This situation violates the fundamental right to personal liberty under Article 21.
- The bench stressed that prolonged detention should not become a de facto punishment, especially when the accused have not yet been pronounced guilty.
Admissibility of Confessions and Fair Trial
- In its ruling, the Supreme Court also addressed the issue of confessions made to investigating officers under the PMLA.
- The bench unequivocally stated that such confessions are generally inadmissible as evidence.
- The reasoning behind this decision is that an individual in custody, especially under investigation by the same agency, cannot be considered to be acting with free will.
- Admitting such statements would be contrary to principles of fairness and justice, as it would likely result in coerced or involuntary confessions being used against the accused.
- The Court held that any statement made by a person in judicial custody could only be recorded with the permission of the court that ordered the remand, ensuring that due process is followed and that the rights of the accused are safeguarded.
Establishing Foundational Facts in PMLA Cases
- Referring to the Vijay Madanlal Choudhary case, the Supreme Court reiterated that the prosecution must establish three foundational facts to proceed with a PMLA case:
- Commission of a Scheduled Offence: There must be evidence of criminal activity related to a scheduled offence under the PMLA.
- Connection to Property: The property in question must be proven to have been derived or obtained, directly or indirectly, from the criminal activity.
- Involvement in Money Laundering: The accused must be shown to be involved, directly or indirectly, in any process or activity connected with the property being proceeds of crime.
- The Court stressed the importance of these foundational facts, noting that the response to bail applications in PMLA cases must clearly outline how these facts are established.
- The burden then shifts to the accused to demonstrate that there are reasonable grounds to believe they are not guilty, based on the parameters set out in Section 45 of the PMLA.
Enforcement Directorate (ED)
- ED is a Multi-Disciplinary Organisation under the Department of Revenue, Min of Finance mandated with the task of enforcing the Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA)
- The ED, headquartered in New Delhi, is headed by the Director of Enforcement. There are five Regional offices and other zonal and subzonal offices in various parts of the country.
- It was formed in 1956 in the Department of Economic Affairs to investigate cases of foreign exchange-related violations, a civil provision. However, in 2002, after the introduction of the PMLA, it started taking up cases of financial fraud and money laundering, which were of criminal nature.
- FEMA 1999 regulates currency transactions, the import and export of commodities, securities, the purchase and sale of any kind, etc.
- FEMA’s main objective is to facilitate external trade and payments. It was also formulated to assist the orderly development and maintenance of the Indian forex market.
- Contraventions of FEMA are dealt with by way of adjudication by designated authorities of ED and penalties up to three times the sum involved can be imposed.
- The PMLA provides authority to the ED to investigate offences of money laundering and to take actions of attachment and confiscation of property.
- PMLA provides for the prosecution of persons involved in money laundering. There are 156 offences under 28 statutes, which are Scheduled Offences under PMLA.
- ED also processes cases of fugitive/s from India under the Fugitive Economic Offenders Act, 2018.
Prevention of Money Laundering Act (PMLA), 2002
- The Prevention of Money Laundering Act, 2002 (PMLA) is an Act of the Parliament of India enacted to prevent money laundering and provide for the confiscation of property derived from money laundering.
- It aims to combat money laundering related to illegal activities such as drug trafficking, smuggling, and terrorism financing.
- It is an act to prevent money laundering and to provide for the confiscation of property derived from or involved in money laundering.
- The Act was formulated for the following objectives:
- Prevent money-laundering.
- Combat/prevent the channelising of money into illegal activities and economic crimes.
- Provide for the confiscation of property derived from, or involved/used in, money laundering.
- Penalise the offenders of money laundering offences.
- Appointing an adjudicating authority and appellate tribunal for taking charge of money laundering matters.
- Provide for matters connected and incidental to the acts of money laundering.
