Two key judgments from the Supreme Court on principles governing bail in money laundering cases have been widely hailed. In the first case, Justices B.R. Gavai and K.V. Viswanathan granted bail to Bharat Rashtra Samithi leader K. Kavitha, jailed since March 15 in the Delhi liquor case under the Prevention of Money Laundering Act (PMLA).

The judgement, authored by Justice Gavai, raises critical questions about lower courts’ refusal of bail and interprets the PMLA’s bail provision in light of broader constitutional values.

The bench noted similarities between Kavitha’s plea and that of former Delhi Deputy Chief Minister Manish Sisodia, granted bail on August 9 in the same case. Sisodia’s bail was granted due to the vast number of witnesses (493) and documents (about 50,000 pages) to be examined, indicating likely trial delays and the accused’s unnecessary custody.

In Kavitha’s case, no crime proceeds were recovered from her. As a woman, she is entitled to special treatment under Section 45(1) of the PMLA, 2002.

The prosecution alleged Kavitha was a kingpin in arranging deals between co-accused, Delhi Chief Minister Arvind Kejriwal, and the south lobby. The trial judge refused bail, citing alleged evidence tampering and witness influencing. Kavitha reportedly formatted her mobile phone to destroy evidence.

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The bench reasoned her custody was unnecessary for investigation, as the CBI and Enforcement Directorate had filed their charge-sheet and complaint, respectively. They also noted the improbability of a swift trial conclusion.

In Manish Sisodia’s case, the Supreme Court held that prolonged pre-trial incarceration should not become punishment without conviction.

Reiterating that bail is the rule and refusal the exception, the bench asserted that the fundamental right to liberty under Article 21 supersedes statutory restrictions.

The proviso to Section 45(1) of the PMLA entitles women to special treatment in bail considerations. This provision allows certain categories of accused—those under 16, the sick or infirm, and women—to be released on bail without satisfying the twin requirements under section 45.

These requirements are: (i) the Public Prosecutor must have an opportunity to oppose the release application; and (ii) if opposed, the Court must be satisfied there are reasonable grounds to believe the accused is not guilty and unlikely to commit an offence while on bail.

The bench held that when a statute provides special treatment for certain accused categories, courts must give specific reasons for denying such benefits.

The bench seriously noted the Delhi High Court Single Judge’s refusal to grant Kavitha bail, which led to her Supreme Court appeal. The Single Judge, while denying the benefit of Section 45(1)‘s proviso, paradoxically concluded that Kavitha was highly qualified and accomplished, with significant contributions to politics and social work. The judge acknowledged these accomplishments but stressed the serious allegations and evidence presented by the prosecution. The Single Judge added that Kavitha could not be equated to a “vulnerable woman”.

The Supreme Court noted the Single Judge’s erroneous observation that the proviso to section 45(1) of the PMLA applies only to a “vulnerable woman”. The Court clarified that a woman’s high education, sophistication, or status as a Member of Parliament or Legislative Assembly does not disqualify her from the benefit of this proviso. The bench held that the Single Judge had completely misdirected herself in denying Kavitha this benefit.

In Prem Prakash vs Union of India Through the Directorate of Enforcement, the Jharkhand High Court had dismissed the bail application of Hemant Soren’s aide in an illegal mining case registered by the ED.

The same bench that heard Kavitha’s appeal also decided Prem Prakash’s appeal in his favour. Justice Viswanathan’s judgement held that section 45 of the PMLA should not be interpreted to make bail impossible to secure.

In Vijay Madanlal Choudhary vs Union of India (2022), the Supreme Court had categorically stated that while Section 45 of PMLA restricts bail rights, it does not impose absolute restraint.

Justice Viswanathan held that, read in context with Manish Sisodia (II) vs DoE (August 9), even under PMLA the governing principle remains “Bail is the Rule and Jail is the Exception”.

In Manish Sisodia (II), the Supreme Court observed that trial courts and High Courts often “play safe” in bail matters, sometimes breaching the principle that bail is the rule. This leads to a flood of bail petitions in the Supreme Court, adding to its huge pendency.

Recalling these observations, Justice Viswanathan held that Section 45 of PMLA, despite imposing twin conditions, does not rewrite the principle to make deprivation the norm and liberty the exception. He noted that in cases where bail is subject to these twin conditions, they must be satisfied.

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Justice Viswanathan added that Article 21, being a higher constitutional right, should guide statutory provisions to align with this superior constitutional edict.

These two Supreme Court judgments have been widely hailed for highlighting crucial questions about the fairness of investigation and quality of evidence in the liquor policy case. The reliance on statements from accused-turned-approvers has come under critical scrutiny during Kavitha’s case hearing. In Prem Prakash’s case, the Court rightly questioned the admissibility of testimony from an accused already in police custody for another case.

Supreme Court judgments are binding on all its benches, unless referred for reconsideration by larger benches on the Chief Justice’s recommendation, following smaller benches’ requests for clarity. These rulings are equally binding on lower courts. However, crucial bail applications in other cases have been pending before High Courts and the Supreme Court for years on trivial grounds. This has led observers to question whether these recent judgments on bail will significantly impact pending cases’ outcomes.

V. Venkatesan is an independent legal journalist based in New Delhi. Formerly Senior Associate Editor with Frontline, he has been reporting and commenting on legal issues.