Rigours of Section 45 of Prevention of Money-Laundering Act, 2002 will not apply where a Prosecution Complaint has been filed without Arrest

The Special Judge (Prevention of Corruption Act, 1988¹) (MPs/MLAs Cases), Rouse Avenue District Court, New Delhi while deciding upon bail applications of co-accused in Directorate of Enforcement v. D.K. Shivakumar² categorically held that:

“…for the applicability of twin conditions of Section 45³ of the Prevention of Money-Laundering Act, 2002⁴ (PMLA) for deciding the bail applications, the accused should be in the custody of the investigation agency. If the investigating agency itself took a conscious decision that it was not a fit case to arrest accused persons during the investigation, then simply on the filing of the charge-sheet before a court, the accused cannot be taken into custody by applying twin conditions of Section 45 of PMLA.”

The Special Judge while coming to the abovestated conclusion, relied heavily upon the judgment of the Supreme Court in Satender Kumar Antil v. CBI⁵. The Supreme Court in Satender Kumar Antil⁶ has clarified the scope and ambit of Section 170⁷ CrPC. While citing the judgment of Siddharth v. State of U.P.⁸, the Supreme Court opined that power under Section 170 CrPC is to be exercised by the court after the completion of the investigation by the agency concerned. Further, where the prosecution does not consciously arrest the accused during the investigation, there is no need for an arrest when a case is sent to the Magistrate under Section 170 CrPC. The Supreme Court even clarified the law to the extent that in such a situation there is not even a need for filling a bail application as the accused is merely forwarded before the Magistrate for framing of charges and issuance of process for further proceedings.

Further, the Supreme Court observed that the law laid down pertaining to Section 170 CrPC will also apply to special statutes like Narcotic Drugs and Psychotropic Substances Act, 1985⁹ (NDPS), PMLA and Unlawful Activities (Prevention) Act, 1967¹⁰ (UAPA) where the accused has to go through extraneous rigours before being enlarged on bail. The Supreme Court held that:

65. We may clarify on one aspect which is on the interpretation of Section 170 of the Code. Our discussion made for the other offences would apply to these cases also. To clarify this position, we may hold that if an accused is already under incarceration, then the same would continue, and therefore, it is needless to say that the provision of the special Act would get applied thereafter. It is only in a case where the accused is either not arrested consciously by the prosecution or arrested and enlarged on bail, there is no need for further arrest at the instance of the court¹¹.

Therefore, the judgment of Satender Kumar Antil¹² makes it clear that firstly, when a charge-sheet has been filed without arrest, the investigation agency has used its discretion to not require the accused in custody. Secondly, where such discretion has been exercised d by the investigation agency there is no need for an arrest of the accused as the meaning of “custody” in Section 170 CrPC is neither judicial custody or police custody, it simply means that the presence of the accused before the Magistrate for framing of charges and issuance of process for the trial. Thirdly, the Supreme Court held that the discussion pertaining to Section 170 CrPC will apply even to special statutes like PMLA, UAPA, NDPS, Protection of Children from Sexual Offences Act, 2012¹³ (POCSO), etc.

Further, the Supreme Court has clarified that provisions of the special Act would be applied only after the accused is arrested. This particularly means that “arrest” is a prerequisite condition for the applicability of provisions of the special statutes. Thus, the rigours of Section 45 of PMLA will only apply in cases where the accused is arrested.

It is now clear that twin conditions under Section 45 of PMLA will apply only in cases where the accused is arrested, in arguendo it can be said that one of the twin conditions in Section 45 of PMLA is that before being enlarged on bail, an accused has to satisfy the court that there are reasonable grounds for believing that he/she is not guilty of such offence. A close reading of Section 19¹⁴ of PMLA i.e. “power to arrest” suggests that the appropriate officer of the Directorate of Enforcement (ED) on the basis of material in his possession, has reason to believe that person has been guilty of an offence punishable under this Act, he may arrest such person. Therefore, when the appropriate officer of the ED does not arrest an accused it is prima facie evident of the fact that the appropriate officer of the ED had no reason to believe that the accused is guilty of an offence punishable under the Act, thereby automatically satisfying the twin condition of Section 45 of PMLA. So, even when Antil¹⁵ judgment says that in PMLA cases of prosecution complaint without arrest, rigours of Section 45 of PMLA will not apply, it is very much in agreement with the scheme of the provisions of PMLA even though the observations of the Supreme Court in Antil case¹⁶ is not limited to cases of PMLA only. The judgment of the Supreme Court in Vijay Madanlal Choudhary v. Union of India¹⁷, on the provisions of the PMLA, does not deal with the question of whether twin conditions of Section 45 of PMLA would be applicable in cases where the prosecution complaint is filed without the arrest of the accused. In this judgment, there is neither any reference to the judgment of the Supreme Court in Satender Kumar Antil case¹⁸ nor has it been overruled.

It is also important to mention that while the judgment of the Supreme Court in Vijay Madanlal Choudhary¹⁹ dealt with the validity of provisions of PMLA, it is the judgment of Satender Kumar Antil²⁰ which specifically deals with the provisions of bail and lays down comprehensive guidelines on bail. Therefore, while deciding on a bail application the judgment of the Supreme Court in Satender Kumar Antil case²¹ has to be followed in letter and spirit and in light of this judgment it is held that rigours of Section 45 of PMLA will only apply when an accused is arrested not in cases of prosecution complaint without arrest.