PMLA Section 45: Why Delhi HC Stayed The Bail To Delhi CM Arvind Kejriwal

Krishnanand explains about Section 45 of the Prevention of Money Laundering Act (PMLA) of 2002 and why the Delhi High Court stayed the bail to Delhi Chief Minister Arvind Kejriwal, who was arrested for alleged violation of the PMLA.

New Delhi: Delhi High Court’s decision to stay the bail granted to the Delhi Chief Minister Arvind Kejriwal has put the spotlight on twin provisions of Section 45 of the country’s stringent anti-money laundering law, the Prevention of Money Laundering Act of 2002.

The federal anti-money laundering agency, the Enforcement Directorate, in March 2024 arrested Arvind Kejriwal for alleged violation of the PMLA in the now-scrapped liquor policy of the Union Territory.

Although the Delhi Chief Minister was granted interim bail by the Supreme Court of India vide order dated May 10 for campaigning in the recently concluded general elections for the 18th Lok Sabha, he was required to surrender to prison authorities on June 2 after the campaigning for the last phase ended on June 1.

In a big relief to the Delhi Chief Minister, he was granted regular bail in the case by a vacation judge Ms Niyay Bindu of the special court in New Delhi on June 20. However, before he could be released from jail the next day, a vacation bench of the Delhi High Court stayed his release from the jail.

The intense courtroom battle in this high-profile matter involving the bail granted to a sitting Chief Minister involved the interpretation of two provisions of Section 45 of PMLA which deal with granting bail to someone accused of laundering money.

What is Section 45 of PMLA, 2002?

Section 45 of the PMLA, 2002 primarily deals with the nature of offence and conditions for grant of the bail to someone accused of laundering money. At the outset, the Section makes it clear that all the offences will be cognisable and non-bailable which in other words means that only a court can grant bail and not the investigating agency or a police officer.

Second, the legislature in its wisdom, made it extremely clear by adding an explanation to the Section that all offences shall mean and shall be deemed to have always meant that all offences under this Act are cognizable offences and non-bailable offences despite anything contrary contained in the Code of Criminal Procedure, 1973. It also authorises officers to arrest anyone without a warrant as per Section 19 of the Act.

More importantly, sub-Section 1(i) of Section 45 of the PMLA makes it clear that no court can grant bail to an accused unless the Public Prosecutor has been given an opportunity to oppose the application for such release. In Arvind Kejriwal’s case, the Enforcement Directorate vehemently opposed the bail application moved by the Delhi Chief Minister in the Special Rouse Avenue court.

More importantly, sub-section 1(ii) of Section 45 casts a duty on the concerned court that in the cases where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail.

It is this provision that makes it very difficult to obtain bail under the PMLA, 2002. In this hotly contested case, Ms Niyay Bindu, the vacation judge of the special court, observed in the order: "ED is again and again pressing upon the twin conditions available under Section 45 of PMLA to fortify its arguments that the aspect of bail under PMLA is altogether different from the provisions of bail under CrPC. However, the vacation judge of the trial court was not convinced with the ED's line of argument as the ED was yet to trace the bigger portion of the alleged proceeds of the crime, Rs 60 crore of the total Rs 100 crore as alleged by the agency.

“This is also noticeable that ED is silent about the facts as to how the proceeds of crime have been utilised in Assembly Elections at Goa by AAP as admittedly after about two years, the bigger portion of the alleged amount remains to be traced out," said the judge.

While discussing the intricate legal issues involved, the Judge said the guilt of the accused is yet to be established and the accused has already given an undertaking in his application that he will not be involved in the offence after his release on bail.

Case takes a curios turn in HC

Aggrieved with the special court’s order to release the Delhi Chief Minister on bail, the ED immediately approached a vacation bench of the High Court which next day stayed the bail order before Arvind Kejriwal could be released from the jail.

In this case, the ED filed a petition in the High Court challenging the bail given to Delhi CM under Section 439(2) and Section 482 of the Cr.P.C, 1973 along with an application seeking an ad-interim ex-parte stay against the bail order.

While the main petition challenging the regular bail to Delhi CM will be listed before a roster bench of Delhi HC on July 10, the vacation bench of the HC has only disposed of the application seeking a stay against the operationalisation of the bail order to Delhi CM.

What the High Court said on twin tests under Section 45

In the High Court, both the prosecution and the defence relied on the Supreme Court's judgment in the Vijay Madan Lal Choudhary versus Union of India matter in support of their contention.

In this case, the Supreme Court has concluded that at the stage of consideration of application for grant of bail, the Court is expected to consider the question from the angle as to whether the accused was possessed of the requisite mens rea (guilty mind) and the court is not required to record a positive finding that the accused had not committed an offence under the Act.

In Delhi CM's case, the special court observed that "the guilt of accused is yet to be established," while releasing him on bail. But it failed to convince the High Court which observed that the vacation judge had not discussed the requirements of section 45 of PMLA while passing the bail order.

"The trial court should have at least recorded its satisfaction about fulfillment of twin conditions of section 45 of PMLA before passing the impugned order," said the High Court while allowing the ED's application seeking a stay against operationalisation of bail order to Delhi CM.

However, ED's main application under Section 439 (2) and 482 of the Cr.P.C. challenging the grant of bail to Delhi CM will be listed before a roster bench early next month.