Why in news?

The Supreme Court granted bail to Bharat Rashtra Samithi (BRS) leader K Kavitha in the graft and money laundering cases related to the Delhi excise policy scam. The court emphasized that Kavitha's custody is no longer necessary as the investigation is complete.

The court referred to its earlier decision in the case of Manish Sisodia, asserting that undertrial custody should not be punitive. It highlighted Section 45(1) of the Prevention of Money Laundering Act (PMLA), which allows special consideration for women in granting bail.

What’s in today’s article?

• Section 45 of the PMLA
• Key highlights of the judgement

Section 45 of the PMLA

• About
  • Section 45 of the Prevention of Money Laundering Act (PMLA) speaks about the conditions set for bail.
  • It states that no accused person shall be granted bail unless:
    • the Public Prosecutor has been given an opportunity to oppose the application for such release; and
    • 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.
    • Basically, this section prescribes a rather high bar for granting bail. The negative language in the provision itself shows that bail is not the rule but the exception under PMLA.
• Twin test of bail under Section 45 of PMLA
  • The twin conditions of bail under Section 45 of the PMLA pose stringent thresholds for an accused.
    • For one, the person has to prove in court that he or she is prima facie innocent of the offence.
    • Secondly, the accused should be able to convince the judge he would not commit any offence while on bail.
  • The burden of proof is entirely on the incarcerated accused, who would be often handicapped to fight the might of the state.
  • The twin conditions make it almost impossible for an accused to get bail under the PMLA.
    • Before the 2019 amendments of PMLA, if someone was accused of a crime related to money laundering, the law automatically assumed they were guilty of the original crime (called the "scheduled offence").
    • The accused had to prove they were not involved in that crime to get bail.
• Exceptions
• There is an important exception allowing bail for individuals who are women, minors (under 16), or those who are sick or infirm, if the Special Court permits.
• This exception is akin to provisions in the Indian Penal Code that provide special consideration for women and minors.
• Legal precedent for such exceptions
  • In 2023, the Delhi High Court granted bail to Preeti Chandra, wife of Sanjay Chandra, under the exception for women in Section 45(1) of the Prevention of Money Laundering Act (PMLA).
  • The Enforcement Directorate (ED) argued that she was not a household lady.
  • However, the court rejected this distinction, stating that neither the PMLA nor the Constitution differentiates between types of women, whether they are household women, businesswomen, or political figures.
  • The court criticized the attempt to create sub-classifications within the broader category of "woman," deeming it misconceived.
  • However, the court also specified that to be eligible for bail, the accused must not be a flight risk or likely to tamper with witnesses.

Key highlights of the judgement

• Background of the case
  • The CBI, in its chargesheet, alleged that BRS MLC K Kavitha "demanded, collected, and provided" Rs 100 crore to the Aam Aadmi Party (AAP) to influence the now-scrapped Delhi excise policy.
  • The ED claimed Kavitha was part of a "South Group" that received undue favors and stakes in wholesale businesses and retail zones from AAP leaders in exchange for the money.
    • The alleged bribes were reportedly used to fund AAP’s 2022 Goa Assembly election campaign.
  • The ED named Kavitha as an accused in its sixth supplementary chargesheet.
• Key highlights of the judgement
  • Bail Justification
    • The court stated that since the investigation is complete and the chargesheet has been filed, Kavitha's custody is no longer necessary.
    • She has been in jail for five months, and the trial is unlikely to conclude soon.
    • The court emphasized that undertrial custody should not become a form of punishment.
  • Criticism of the Delhi High Court's Ruling
    • The court criticized a Delhi High Court ruling that denied bail to an educated, sophisticated woman under the PMLA's beneficiary provision for women.
    • It warned that if such reasoning became law, it would mean no educated woman could get bail, affecting courts in Delhi's jurisdiction.
    • The court rejected the idea of creating distinctions between an MP and a common person, stating that the High Court's reasoning introduced an artificial discretion not present in the statute.