The Supreme Court of India, in a judgment delivered on 12 May 2023, set aside the Telangana High Court's order granting bail to an accused in a money laundering case, holding that the stringent twin conditions prescribed under Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA) are applicable to anticipatory bail applications under Section 438 of the Code of Criminal Procedure, 1973 as well. The Bench of Justice M.R. Shah and Justice C.T. Ravikumar ruled that creating a distinction between regular bail and anticipatory bail under PMLA would be irrational and arbitrary.
Background
The accused, Aditya Tripathi, faced investigation by the Enforcement Directorate for offences arising from predicate offences under Sections 120-B, 420, 468, and 471 of the Indian Penal Code and Section 7 read with Section 13(2) of the Prevention of Corruption Act, 1988. The Telangana High Court had granted him bail, which the Enforcement Directorate challenged before the Supreme Court.
The central legal question was whether the twin conditions under Section 45 of the PMLA — requiring the Court to be satisfied (a) that there are reasonable grounds for believing the accused is not guilty of the alleged offence, and (b) that the accused is not likely to commit any offence while on bail — must be satisfied even when an accused seeks anticipatory bail. The Supreme Court had upheld the constitutional validity of these twin conditions in Vijay Madanlal Choudhary v. Union of India (2022).
Key Holdings
The Supreme Court established the following principles:
Twin conditions extend to anticipatory bail: Section 45 of the PMLA applies with full force to applications for anticipatory bail. Anticipatory bail is merely bail granted in anticipation of arrest, and the principles governing its grant must incorporate the statutory restrictions applicable to regular bail under PMLA.
No artificial dichotomy: The Court held that it would be illogical and contrary to legislative intent to exclude Section 45 from anticipatory bail proceedings. Parliament could not have intended to create a situation where an accused who is arrested must satisfy stringent conditions for release, while an accused who anticipates arrest faces a lower threshold.
Ongoing investigation relevant: The Court noted that where enquiry or investigation by the Enforcement Directorate is ongoing for scheduled offences, the rigour of Section 45 must be applied. The mere filing of a chargesheet in the predicate offence does not dilute PMLA bail conditions.
High Court's order set aside: The Telangana High Court's bail order was vacated on the ground that it had failed to apply the twin conditions under Section 45 while granting relief to the accused.
Implications for Practitioners
This ruling significantly constrains defence strategy in PMLA cases. Practitioners had previously explored anticipatory bail as a potential avenue to avoid the harsh twin conditions, arguing that Section 45 by its text applies only to post-arrest bail. That argument is now foreclosed by this judgment.
Criminal defence lawyers must now satisfy the same high evidentiary threshold for anticipatory bail as for regular bail in PMLA matters. As a practical matter, this makes obtaining pre-arrest protection in money laundering investigations considerably more difficult, since the accused must demonstrate reasonable grounds for believing in their innocence — effectively requiring a prima facie assessment before investigation is complete.
Prosecutors and the Enforcement Directorate now have a clear precedent to oppose anticipatory bail applications by invoking Section 45 twin conditions, strengthening the ED's investigative position in money laundering cases.