Manish Sisodia and the Distortion of Bail Jurisprudence under the PMLA

Manish Sisodia.

(Photo: PTI)

On Friday, the Supreme Court of India granted bail to Manish Sisodia, a prominent leader of the Aam Aadmi Party (AAP) and former Deputy Chief Minister of Delhi, following his 17-month-long detention in connection with allegations of corruption and money laundering linked to the purported Delhi excise policy scam. This decision by the apex court represents a significant reaffirmation of the foundational legal principle that bail should be the rule, and imprisonment should be the exception. 

Manish Sisodia was initially arrested in February 2023 by the Central Bureau of Investigation (CBI) on charges of money laundering arising from his alleged involvement in the now-defunct Delhi liquor policy. Many senior AAP leaders including Arvind Kejriwal, Sanjay Singh, and Satyendra Jain have also been arrested under various provisions of the Prevention of Money Laundering Act, 2002 (PMLA). The charges levelled against them encompass purported acts of favouritism towards proprietors and shareholders within the private sector, the dispensation of waivers and reductions in license fees, the proliferation of licenses to new enterprises, and allegations of bribery regarding the grant of liquor licenses.  

In its order granting bail, the Supreme Court criticised the lower courts for repeatedly denying Sisodia bail. The bench, comprising Justices BR Gavai and KV Viswanathan, underscored the significance of the legal principle enshrined in the landmark 1977 judgment in the case of State of Rajasthan v Balchand alias Baliya. In that ruling, the Court established that bail should generally be granted unless there exist compelling reasons to refuse it, such as the possibility of the accused absconding, obstructing the course of justice, or intimidating witnesses.  

While Manish Sisodia and Sanjay Singh have been granted bail, Arvind Kejriwal and Satyendra Jain remain in custody, facing charges brought by the CBI and the Enforcement Directorate (ED). Despite numerous attempts to secure their release, the lower courts have consistently rejected the bail applications of Kejriwal and Jain. 

The rationale underpinning the recurrent denial of bail to each of them is rooted in the jurisprudential framework known as the 'twin test,' as outlined by the Supreme Court, which must be satisfied for the grant of bail under Section 45 of the PMLA. It stipulates that a court may authorise bail for an accused individual if the court is convinced of two primary conditions: (i) the existence of reasonable grounds to believe that the accused is "not guilty of such offence," and (ii) the assurance that the accused is "not likely to commit any offence while on bail," commonly referred to as the "twin conditions."

These conditions represent a dialectical interplay that embodies decades of established criminal jurisprudence, harmonised with constitutional principles. At its essence, this interplay embodies the inherent tension between the presumption of innocence and the imperative to combat intricate financial transgressions. 

The constitutional validity of the twin conditions stipulated within Section 45 of the PMLA underwent scrutiny before the Supreme Court in the case of Nikesh Tarachand Shah v Union of India (Nikesh Tarachand Shah Case). In this landmark judgment, the SC declared Section 45 of the PMLA unconstitutional. This provision, prior to legislative amendments in 2018, mandated that an accused prove their innocence concerning the "scheduled offence." The Supreme Court deemed this requirement manifestly arbitrary, as it compelled an accused in a money laundering proceeding to establish innocence regarding a distinct offence, divergent from the charge of money laundering under the PMLA.  

Furthermore, the Court noted that Section 45, as it stood, represented a drastic measure contravening the presumption of innocence enshrined in Article 21 of the Constitution. While acknowledging the presence of compelling State interests in other statutes containing analogous provisions to Section 45, the Supreme Court remained unconvinced of such interests in relation to PMLA offences. Consequently, in 2017, the Court underscored the paramountcy of the presumption of innocence and asserted that the burden to prove innocence at the bail stage cannot be shifted onto the accused, except upon a demonstration of a compelling State interest. Notably, while recognising the legislative prerogative to restrict the application of this general rule, the Court emphasised the necessity of establishing a compelling State interest in doing so. 

Following the Nikesh Tarachand Shah judgment, Parliament enacted amendments to the PMLA in 2018 to rectify specific deficiencies highlighted by the Supreme Court or rather to negate the effects of the SC judgment. The amended Section 45 no longer necessitates the accused to establish innocence regarding the ‘scheduled offence’ but instead requires them to prove innocence concerning the offence of money laundering under the PMLA. 

Subsequently, the amended Section 45 faced judicial scrutiny once more in the Vijay Madanlal Choudhary case, wherein the Supreme Court overturned the Nikesh Tarachand Shah decision. The Court upheld the constitutional validity of the twin conditions, citing the purposes and objectives of the PMLA as a specialised legislation addressing money laundering activities with transnational ramifications. This decision marked a pivotal moment in the evolution of bail jurisprudence under the PMLA, granting significant discretion to the judiciary and underscoring the exceptional nature of money laundering offences. 

However, this departure from established norms has elicited concerns regarding the erosion of fundamental legal principles and the potential for abuse of power. The intricacies of the PMLA, coupled with procedural irregularities and investigative delays, have led to prolonged periods of judicial custody for individuals without substantive evidence linking them to alleged offences. Such detentions, based on mere suspicion rather than concrete evidence, undermine established legal principles and hinder the equitable dispensation of justice.  

The Trial court’s approach in consistently denying bail to Manish Sisodia, Arvind Kejriwal, and Satyendra Jain represents a troubling departure from fundamental legal principles, particularly the presumption of innocence. The lower courts have repeatedly rejected the bail applications of these individuals, effectively subjecting them to prolonged detention based on speculative accusations rather than solid evidence.

This tactic not only contravenes the presumption of innocence enshrined in the Constitution but also raises serious concerns about the misuse of judicial processes to suppress political dissent and undermine democratic values.

By leaning on the stringent twin conditions under Section 45 of the PMLA, the State has effectively weaponised the legal system, turning it into a tool of coercion rather than justice. Such an approach threatens the integrity of the judicial process and risks eroding public trust in the very institutions meant to uphold the rule of law. 

In light of these challenges, there is a pressing need to reconcile divergent standards prescribed under special laws with basic constitutional imperatives through legislative intervention. Recent judicial interventions seeking to introduce safeguards and clarify the contours of bail jurisprudence offer hope amidst these uncertainties. However, a comprehensive re-evaluation of bail jurisprudence under special laws is indispensable to ensure the equitable administration of justice and the protection of fundamental rights. 

(The authors are Advocates at the Supreme Court of India. Views are personal.)