How SC is using ‘right to speedy trial’ to award bail in money laundering cases

Since July, the Supreme Court has granted or confirmed bail to a significant number of people accused in cases of money laundering. In these judgments, the court has invoked the “right to speedy trial” of the accused persons and criticised the Enforcement Directorate for delaying both the investigation as well as the trial.

This is significant given that the Modi government has used India’s draconion money-laundering law, the Prevention of Money Laundering Act, to target the Opposition.

More liberal bail conditions represents a shift in the Supreme Court’s jurisprudence on money laundering matters from July 2022, when in a landmark judgment it had endorsed the stringent bail conditions in the Prevention of Money Laundering Act.

However, the exact period without trial to qualify as “unreasonable” and thus be amenable to bail is entirely up to judicial discretion.

Illiberal history

Between October 2021 and March 2022, a three-judge bench of the Supreme Court comprising Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar heard a batch of long-standing petitions challenging certain provisions of the Prevention of Money Laundering Act.

One of the provisions called into question was Section 45, which stipulates that in order to be granted bail, an accused person must satisfy the court that there are “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”. This bail condition, it was argued by the petitioners, takes away the basic right of being deemed innocent until proven guilty, which the law grants to anyone accused of a crime.

Bail is notoriously difficult to obtain under the act due to the draconion nature of the provision.

Upholding the provision, the bench ruled that when considering bail requests under the act, courts should not examine evidence in great detail but instead make decisions based on general likelihoods. To justify such a stiff standards, it referred to similarly restrictive bail provisions in other special statutes such as the Terrorist and Disruptive Activities (Prevention) Act and the Maharashtra Control of Organised Crime Act and emphasised that money laundering was an “aggravated form of crime” that required a special statute.

Review petitions against the judgment have been pending for over two years before the Supreme Court.

Progressive turn

Since July, the Supreme Court has granted bail in money laundering cases to former Delhi Chief Minister Arvind Kejriwal, former Delhi Deputy Chief Minister Manish Sisodia, Telangana MLA K Kavitha, Tamil Nadu Minister V Senthil Balaji, Jharkhand Chief Minister Hemant Soren’s aide Prem Prakash, former Aam Aadmi Party communications-in-charge Vijay Nair, suspended Chhattisgarh bureaucrat Saumya Chaurasia, Chhattisgarh-based businessman Sunil Kumar Agarwal and former Bhushan Steel Limited Managing Director Neeraj Singal, among many others. It also confirmed the bail granted to Soren in a money laundering case by the Jharkhand High Court.

In each of these bail orders, the court, in light of the long incarceration of the accused and the improbability of the trial against them commencing soon, granted bail by relying on the right to life and liberty of the accused under Article 21 of the Constitution.

While granting bail to Kejriwal on July 12, a bench of Justices Sanjiv Khanna and Dipankar Datta questioned the Enforcement Directorate’s grounds for arrests and rejected claims that arrests could be based only on the agency’s “grave suspicion” without sufficient legal evidence. It also highlighted the violation of Kejriwal’s right to life and liberty due to his imprisonment for ninety days.

A separate bench of Justices BR Gavai and KV Viswanathan granted bail to Sisodia on August 9 by emphasising on his right to a speedy trial. Building further on the progressive jurisprudence from Kejriwal’s bail order, Gavai and Viswanathan argued that Sisodia’s continued imprisonment for 17 months and the impossibility of the trial against him commencing soon violated his “right to speedy trial, which is a fundamental right within the broad scope of Article 21 of the Constitution”. It held that “bail is the rule and jail an exception”.

Sisodia had previously twice been denied bail by the Supreme Court in the matter.

Sisodia’s bail order was subsequently relied upon to grant bail to Kavitha on August 27 and Nair on September 2. Both are among the accused, along with Kejriwal and Sisodia, in the Delhi liquor policy alleged scam case. Kavitha had been in custody for over five months and Nair for almost two years.

In Sisodia and Kavitha’s bail orders, the Supreme Court criticised lower courts for denying bail without considering the legal principle that “bail is the rule, jail is the exception.” The apex court pointed out errors in their reasoning, including erroneously blaming Sisodia for causing the delay of his trial, disregarding the stipulated timeline for concluding the trial set by the Supreme Court for Sisodia’s case and misinterpreting legal provisions for women’s bail that Kavitha could have benefitted from.

In Kejriwal’s, Sisodia’s and Kavitha’s orders, the Supreme Court also questioned the fairness of the Enforcement Directorate’s prosecution of the accused in the liquor policy case and its selective treatment of some accused as approvers. An approver is someone who confesses to their involvement in a crime and agrees to testify against their accomplices in exchange for a pardon or reduced punishment.

On August 28, a bench of Gavai and Viswanathan granted bail to Prakash – who had been in prison for over thirteen months – by, again, relying on the Sisodia bail order. Without the trial having begun, prolonged incarceration as an undertrial could not be allowed to become a mode of punishment, the court reasoned.

The judgment assumes further significance because the court recognised the protection of Article 21 as an additional criterion for granting bail under the Prevention of Money Laundering Act.

While granting bail to Agarwal on August 7 and Chaurasia on September 25, the bench of Kant, Datta and Bhuyan also questioned the low conviction rate in money laundering cases and the Enforcement Directorate’s insistence on keeping accused persons behind bars without framing charges against them. It also criticised the Enforcement Directorate for its poor quality of prosecution.

According to data furnished by the Union Home Ministry in Parliament in August, in the ten years since 2014, 5,297 cases were registered under the Prevention of Money Laundering Act, with only 40 of them resulting in convictions and 140 accused persons under arrest.

But perhaps the court’s most progressive judgment in this regard came on September 26. While granting bail to Balaji, the Supreme Court bench of Justices AS Oka and AG Masih acknowledged that there was a prima facie case of money laundering against Balaji. Yet, it granted him bail on the basis that he had been in custody for over 15 months without trial. “[I]nordinate delay in the conclusion of the trial and the higher threshold for the grant of bail cannot go together,” the court held. It noted that the requirement for a speedy trial should be read into special laws that have strict bail rules.

Not only does this judgment disregard the presumption of criminality while granting bail under the money laundering law, it also potentially extends the benefit of bail due to delayed trial to other special statutes with stringent bail provisions such as the Unlawful Activities (Prevention) Act and the Narcotic Drugs and Psychotropic Substances Act.

Reasonable limits

These judgments represent a progressive shift in the Supreme Court’s outlook towards granting bail in money laundering cases, especially after its 2022 judgment upholding the stringent bail conditions in section 45.

However, this gradual whittling down of bail conditions extends only to those who have been incarcerated while their trial is “likely to prolong beyond reasonable limits”, as stated several times by the Supreme Court in Balaji’s bail order. What is a “reasonable” period is still entirely up to judicial discretion, with the Supreme Court having granted bail in the last three months to those under imprisonment for periods ranging from a few months to a few years. The only guideline the court has provided to determine this is the duration of the minimum and maximum sentence for the offence for which one is accused.

This still does not limit the Enforcement Directorate’s near-unchecked exercise of its arrest power under the Prevention of Money Laundering Act, which has been widely misused to target the political Opposition.

The lack of regulation and misuse of these powers has only been alluded to in some of these judgments, with the bench in the Kejriwal order having referred the question of adding necessity of arrest as an additional ground within Section 19(1) of the Prevention of Money Laundering Act – which prescribes the conditions to be fulfilled for arrest – to a larger bench of the court for adjudication.

The Chief Justice of India is yet to form the larger bench or refer the question to it.

The Supreme Court had also ventured onto a similar progressive path of jurisprudence in bail matters under the Unlawful Activities (Prevention) Act, an anti-terror act held to have been used by the Modi government to target political dissidents. In 2021, the Supreme Court had, while granting bail to an accused person under the act, held that even under stringent anti-terror laws, prolonged delay in a trial necessitated the grant of bail.

However, even after that, the court earlier this year denied bail to an accused under the act, holding that “jail is the rule and bail is the exception in UAPA cases”.

As Scroll has reported in July, the Supreme Court speaking in contradictory voices on bail is a continuing feature of the court.