In a recent case titled Ajay Kumar vs Directorate of Enforcement in Criminal Application (BA) No. 1149 OF 2021 that was delivered on January 28, 2021, a two Judge Bench of the Bombay High Court comprising of Justice VM Deshpande and Justice Vinay Joshi observed that the twin conditions for bail in Section 45(1) of the Prevention of Money Laundering Act, 2002 which were declared unconstitutional by the judgment of the Apex Court in Nikesh T Shah Vs Union of India (2018) 11 SCC 1, stand revived in view of the legislative intervention vide Amendment Act 13 of 2018. The Division Bench has thus departed from the view that was earlier expressed by a single Judge Bench of the Bombay High Court in Sameer M Bhujbal Vs Assistant Director, Directorate of Enforcement. So now this judgment by the Division Bench has to be accepted.
To start with, this notable judgment authored by Justice Vinay Joshi for a Division Bench of Bombay High Court comprising of himself and Justice VM Deshpande first and foremost puts forth in para 1 that, “Reference made by learned Single Judge dated 03.12.2021 has occasioned us to deliberate upon the conflicting views expressed by the learned Single Judges on the issue involved. The center of focus revolves around the effect of post-amended section 45 of the Prevention of Money-Laundering Act, 2002 (PML Act) in terms of amendment introduced w.e.f. 19.04.2018, after decision of the Supreme Court in the case of Nikesh Tarachand Shah Vs. Union of India (2018) 11 SCC 1. The applicant (accused) has preferred an application in terms of section 439 of the Code of Criminal Procedure, 1972 (code) read with section 65 of the PML Act, for grant of bail in ECIR/NGSZO/13/2021 registered at the Director of Enforcement (ED), Sub-Zonal Office, Nagpur, in connection with the offence of money laundering in terms of section 3 of the PML Act punishable under section 4 of the said Act.”
As we see, the Bench then observes in para 2 that, “During the course of hearing of bail application, learned Counsel appearing for applicant-accused canvassed that rigor of complying duel conditions incorporated in section 45(1)(ii) of the PML Act would not apply in view of the decision of the Supreme Court in the case of Nikesh Shah (supra). It is the contention that the Supreme Court has declared section 45(1) of the PML Act unconstitutional to the extent of twin conditions incorporated therein for grant of bail. The said submission appears to have been countered by the prosecution stating that due to subsequent amendment introduced vide Act No.13 of 2018, the twin conditions have been revived and therefore the statutory mandate would apply while considering the bail application.”
To be sure, the Bench then envisages in para 3 that, “To substantiate the contention about non-applicability of twin conditions post decision of the Supreme Court in the case of Nikesh Shah (Supra), reliance was placed on two decisions of this Court in the case of Sameer M. Bhujbal Vs. Assistant Director, Directorate of Enforcement, (B.A. No.286/2018 – Bombay High Court) and the case of Union of India Vs. Yogesh Narayanrao Deshmukh (2021) SCC Online Bom 2905. Besides that some decisions of other High Courts in cases of Dr. Shivinder Mohan Singh Vs. Directorate of Enforcement (2020) SCC Online Del 766 (Delhi High Court), Upendra Rai Vs. Directorate of Enforcement (2019) SCC Online Del 9086 (Delhi High Court), Dr. Vinod Bhandari Vs. Assistant Director (2018) SCC Online MP 1559 (Madhya Pradesh High Court) and Most. Ahilya Devi Vs. State of Bihar & Ors. (Cri. Misc. Appl. No.41413/2019) (Patna High Court) have been pressed into service. The learned Counsel Mrs. Mugdha Chandurkar appearing for the Enforcement Directorate (ED) in bail application, expressed her reservation about the view expressed in above decisions by reiterating that due to subsequent amendment, twin conditions would revive. In that regard she relied on the decision of Delhi High Court in cases of Bimal Kumar Jain Vs. Director of Enforcement, 2021 SCC Online Del 3847. Her submission appears to be that the subsequent amendment introduced by the Legislation in section 45(1) has cured the defects pointed out by the Constitutional Court in the case of Nikesh Shah (supra). Since the very foundation which was the basis for declaring twin conditions incorporated in section 45(1) of the Act unconstitutional has been removed, the twin conditions would squarely apply. The Reference Court also took note of the decision of Orissa High Court in case of Mohammad Arif Vs. Directorate of Enforcement, 2020 SCC OnLine Ori 544 and the decision of the Supreme Court in the case of P.Chidambaram Vs. Directorate of Enforcement (2020) 13 SCC 791 while making reference.”
Furthermore, the Bench then enunciates in para 4 that, “On confronting with rival submissions, the learned Single Judge of this Court expressed that the very foundation of the declaration of the unconstitutionality was that the stringent twin conditions operated indiscriminately before amendment. According to the learned referral Judge, the basis and foundation of the declaration of unconstitutionality stood removed in view of the Legislative intervention and therefore expressed his inability to concur with the view expressed by the learned Single Judges of this Court in the cases of Sameer Bhujbal (supra) and Yogesh Deshmukh (supra).”
Be it noted, the Bench then underscores in para 38 that, “It is a settled law that a statute must be given its effect unless it is struck down. Always there is presumption about constitutionality of the provisions of law. For this purpose, we may refer to the decisions of the Supreme Court in the cases of Nagaland Senior Government Employees Welfare Association and Others Vs. State of Nagaland and Ors., (2010) 7 SCC 643 and M.L. Kamra Vs. The Chairman cum Managing Director, New India Assurance Co. Ltd. and Anr., AIR 1992 SC 1072. Unless the provision introduced by the Legislature is struck down or wiped up from Statute book, its effect cannot be nullified unless found to be exceptionally undoing the earlier decision of the Court.”
To put things in perspective, the Bench then points out in para 39 that, “Essentially the reference arises out of bail application. The limited question is referred to the Larger Bench to decide whether the twin conditions of Section 45(1) of the PML Act which were declared unconstitutional by the Supreme Court in Nikesh Shah’s case stands revived by virtue of the subsequent Legislative amendment. We remind ourselves that the constitutional validity of the Amendment Act 13 of 2018 is not under challenge, which is admittedly pending before the Supreme Court. The entire tenor of argument advanced by the learned Senior Counsel Mr. Manohar is on the line that all the defects pointed out by the constitutional Court have not been cured and therefore the Amendment Act 13 of 2018 has no effect of revival of twin conditions. The endeavour was to impress that the Amendment Act 2018 has not cured all the defects and thus it has no effect in reviving twin conditions. The learned ASGI has countered said submission by contending that all the defects pointed out by the Supreme Court stood cured by the Amendment Act 13 of 2018. The issue whether the Amendment Act 13 of 2018 has cured all the defects directly connects to the aspect of validity of the Amendment Act 13 of 2018, which is not the matter for consideration nor can be dealt under this reference arising out of bail application filed under the statutory provision.”
It cannot be glossed over that the Bench states in para 45 that, “After decision of Nikesh Shah (supra) the Parliament has introduced an amendment to Section 45 of the Act, which has changed the entire complexion. Merely because the entire section is not re-enacted, has no consequence. Admittedly, the Amending Act is not struck down yet by the Courts as the said challenge is pending. Since the Legislative amendment on date is in existence, presumption of constitutionality would apply. In the subsequent pronouncement of P. Chidambaram’s case (supra), the Supreme Court took a note of its earlier decision in case of Nikesh Shah (supra) and subsequent amendment, but never expressed that despite amendment, twin conditions do not survive. Our view is fortified by recent decision of the Supreme Court in the case of Assistant Director, Directorate of Enforcement Vs. V.C. Mohan decided on 04.01.2022. In said case, High Court of Telangana at Hyderabad has granted anticipatory bail in connection with offence under the PML Act. It is observed that though offence under the PML Act is dependent on the predicate offences that does not mean that while considering the prayer for bail, in connection with offence under the PML Act, the mandate of section 45 of the PML Act would not come into play. Pertinent to note that the judgment in Nikesh Shah’s case was brought to the notice of the Supreme Court. However, it is observed that the underlying principles and rigor of section 45 of the Act must get triggered although the application is under section 438 of the Cr.P.C. The reading of said judgment conveys that the Supreme Court in its above pronouncement even after taking note of the decision of Nikesh Shah (supra) has expressed that the rigor of Section 45 of the PML Act would be attracted while dealing with bail application.”
Quite significantly, the Bench then clearly states in para 47 that, “The Amending Act has changed the entire complexion. Notably section 45 of the Act has not been repelled from the statute book. Therefore, in our view, the section as it stood after amendment has to be read as it stands. We do not find it necessary that the entire section has to be resurrected afresh. The very effect of the amendment has changed the periphery of its applicability. The section which stands after amendment has to be read as a whole.”
Quite forthrightly, the Bench points out in para 48 that, “Absence of reference in notification dated 29.03.2018 thereby amending section 45(1) of the Act about its retrospective applicability (as observed in Sameer Bhujbal’s case), does not take away the force and impact of amendment. It is for the Legislature to give effect to the amending provisions prospectively or retrospectively. However, that cannot be reason for ineffecting the amending provisions of the Act.”
Most significantly, the Bench then holds in para 49 that, “We may reiterate that the reference arose out of statutory jurisdiction and not constitutional jurisdiction of this Court. Unless there is proper challenge and pleadings, the issue of constitutional validity cannot be undertaken. Undoubtedly, the Legislature has power and competence to amend the provisions of the Act. Unless the amended provision is struck down by the Courts, it cannot be watered down. Since after the amendment the entire complexion of section 45 has been changed, we are not in agreement with the contention that the entire section has to be reenacted by way of amendment after decision in the case of Nikesh Shah (Supra). Therefore, in our opinion, the twin conditions would revive and operate by virtue of Amendment Act, which is on date in force. In view of that, we answer the reference by stating that the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018.”
In a nutshell, the Division Bench of Nagpur Bench of Bombay High Court has made it manifestly clear that the twin conditions for bail in Section 45(1) of the Prevention of Money Laundering Act, 2002 that were declared unconstitutional by the Apex Court in Nikesh’s case (supra) stands revived by the 2018 Amendment Act. This latest most commendable judgment has to be certainly followed now. The earlier decision by the single Bench of the Bombay High Court thus stands overruled now in this leading case by Division Bench! No denying it!Sanjeev Sirohi
